TABLE OF CONTENTS

PERSONS AND FAMILY RELATIONS 1

PROPERTY 30

WILL AND SUCCESSION 58

OBLIGATIONS AND CONTRACTS 90

SALES AND LEASE 133

PARTNERSHIP 169

CREDIT TRANSACTIONS 196

TORTS AND DAMAGES 226

LAND TITLES AND DEEDS 256

CONFLICT OF LAWS 277

This is the Intellectual Property

of the San Beda College of Law 2008 Centralized Bar Operations.
Unauthorized use and reproduction of this material is not allowed.
San Beda College of Law 1
2008 CENTRALIZED BAR OPERATIONS

CIVIL LAW
PERSONS AND FAMILY RELATIONS
PERSONS AND FAMILY RELATIONS

Effect and Application of Laws

CIVIL CODE ARTICLE 3 Ignorance of the law excuses
Took effect on August 30, 1950 no one.
A CONCLUSIVE presumption and applies only to
ARTICLE 2 Effectivity of Laws. mandatory and prohibitory laws.
Art. 3 will not apply to foreign laws because there
GENERAL RULE: Laws take effect after 15 days
is no judicial notice of such foreign laws
following the completion of its publication in
the Official Gazette or in a newspaper of
general circulation (EO No. 200). ARTICLE 4 Non–Retroactivity of Laws.
EXCEPTION: “Unless otherwise provided by the GENERAL RULE: No retroactive effect.
law.”
EXCEPTIONS: (P2UT NICE)
“Shorter/longer period” than the 15-day, then
such period shall prevail. 1. Tax laws
“Takes effect immediately” means it shall take 2. Interpretative statutes
effect immediately after publication with the 3. Procedural/remedial
15-day period being dispensed with (Tañada vs.
Tuvera GR No. L-63915. December 29, 1986). 4. Curative statutes

NOTE: 5. Emergency laws

a. The publication cannot be dispensed with 6. Laws creating new rights

and the law must be published in full. 7. Unless the law otherwise provides
b. Internal instructions of administrative 8. Penal laws favorable to the accused.
agencies and municipal ordinances are not
covered by this requirement. EXCEPTIONS TO THE EXCEPTION: (E–I)

c. Administrative rules and regulations must be 1. Ex Post Facto Laws

published if their purpose is to enforce or 2. Laws that impair obligation of contracts
implement existing laws pursuant to a valid
delegation.

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
2 MEMORY AID IN CIVIL LAW
Personas and Family Relations
ARTICLE 5 Acts Contrary To Law.
GENERAL RULE: Acts contrary to mandatory or
prohibitory laws are VOID.
EXCEPTIONS: (A–V–P)
1. The law itself auhorizes its validity (ex.
lotto, sweepstakes)
2. The law makes the act only voidable (ex.
voidable contracts where consent is
vitiated).
3. The law makes the act valid BUT
punishes THE VIOLATOR (ex. marriage
solemnized by a person without legal
authority)
ARTICLE 6 Waiver of Rights.
GENERAL RULE: Rights can be WAIVED.
EXCEPTIONS: (C–PEN)
1. Waiver is contrary to law, public order,
public policy, morals or good customs;
2. If the waiver is prejudicial to a third party
with a right recognized by law.
3. Alleged rights which really do not yet
exist, as in the case of future inheritance
4. If the right is a natural right, such as right
to be supported.
Requisites for a valid waiver: (CUE–CF)
1. Full capacity to make the waiver.
2. Waiver must be unequivocal
3. Right must exist at the time of the waiver
4. It must not be contrary to law, public policy,
morals or good customs or prejudicial to a
third person with a right recognized by law.
5. When formalities are required, the SAME
must be complied with.
ARTICLE 8 Judicial decisions form part
of the law. (DOCTRINE OF STARE
DECISIS)
NOTE:
They are part of the law as of the date of the
enactment of said law because the Supreme
Court’s interpretation merely established the
contemporaneous legislative intent that the
construed law purports to carry into effect (People v.
Licera G.R. No. L-39990, July 2, 1975).
However, when a doctrine is overruled and a
different view is adopted, the new doctrine
should be applied prospectively and should not
prejudice parties who relied on the old doctrine
(People v. Jabinal G.R. No. L-30061. February 27, 1974).
ARTICLES 11 & 12 Customs.
Rules of conduct formed by repetition of acts,
uniformly observed as a social rule. They are
legally binding and obligatory.
GENERAL RULE: Customs must be proved as a
fact according to the rules of evidence.
EXCEPTION: A court may take judicial notice of a
custom if there is already a decision rendered
by the same court recognizing the custom.
Requisites to Make a Custom an Obligatory
Rule: (P2TO)
1. Plurality or repetition of acts;
2. Practiced by the great mass of the social
group;
3. Practiced for a long period of time;
4. The community accepts it as a proper way of
acting, such that it is considered as
obligatory upon all.
ARTICLE 13 Rule on Periods.
NOTE:
WEEKS
“Calendar week” – Sunday to Saturday
“Week” – Count seven days as indicated; not
necessarily Sunday to Saturday
Policy if the Last Day is a Sunday or a Legal
Holiday:
(a) If the act to be performed within the period is
prescribed or allowed (1) by the Rules of
Court, (2) by an order of the court, or (3) by
any other applicable statute, the last day will
automatically be the next working day.
(b) If the act to be performed within the period
arises from a contractual relationship, the act
will become due despite the fact that the last
day falls on a Sunday or Holiday.
APPLICABLE LAWS
1. Penal laws and laws of public security (Art.
14)
Territoriality rule governs regardless of the
nationality but subject to principles of
international law and to treaty stipulations.
2. Laws relating to family rights and duties,
or to the status, condition and legal
capacity of persons (Art. 15)
Nationality rule applies regardless of their
place of residence.
EXCEPTION: Art. 26(2) Family Code
3. Laws on property (real and personal)
The law of the country where the property is
situated shall govern (Lex rei sitae).
San Beda College of Law 3
2008 CENTRALIZED BAR OPERATIONS

EXCEPTION: Paragraph 2 of Article 16, NCC 4. If the above places are not specified
and they cannot be deduced from the
4. Laws on forms and solemnities
nature and circumstances of the
LEX LOCI CELEBRATIONIS obligation, then the law of the passive
Matters bearing upon the execution, subject shall apply.
interpretation and validity of a contract are RULES ON PERSONAL LAW
determined by the law of the place where the
Domiciliary Rule and Nationality Rule
contract is made (Art. 17)
Distinguished
LEX NATIO– LEX REI LEX LOCI
NALII SITAE CELEBRATIONIS Domiciliary Rule Nationality Rule

Art. 15, CC Art. 16, CC Art. 17, CC Basis for determining Basis for
personal law of an determining
Citizenship Law of the Law of the place individual is his personal law is his
is the basis place where where the DOMICILE CITIZENSHIP
for the property contract was
determining is situated is executed is the 5. Renvoi Doctrine
the personal the basis for basis for
Where the conflict rules of the forum refer to a
law determining determining law
foreign law, and the latter refers it back to the
applicable law applicable
internal law, the latter (law of the forum) shall
applicable
apply.
Covers Covers both Covers only the
NOTE:
family rights real and forms and
and duties, personal solemnities TRANSMISSION THEORY
status, property (extrinsic validity)
If the foreign law refers it to a third country,
condition
the said country’s laws shall govern
and legal
capacity of 6. Doctrine of Processual Presumption
persons. The foreign law, whenever applicable, should
Exception: Exceptions: Exceptions: be proved by the proponent thereof;
Art. 26, par. (CIAO) 1. Art. 26, par. 1 otherwise, such law shall be presumed to be
2 of Family 1. Capacity of Family Code exactly the same as the law of the forum.
Code to succeed (marriage
2. Intrinsic RULE ON PROHIBITIVE LAWS (Art. 17)
involving
validity of Filipinos GENERAL RULE: Prohibitive laws concerning
the will solemnized persons, their acts or property, and laws
3. Amount of abroad, when which have for their object public order,
successio such are void public policy or good customs are not
nal rights in the r e n d e r e d i n e ff e c t i v e b y l a w s , o r
4. Order of Philippines) judgments promulgated or conventions
successio 2. Intrinsic validity agreed upon in foreign country.
n of contracts EXCEPTION: Art. 26, par. 2 Family Code
NOTE: Example: Divorce Law

The 1 st par. of Art. 17 speaks of the

EXTRINSIC validity of contracts, wills, and
other public instruments. It is silent on what
law shall govern the intrinsic validity of
contracts. In determining the intrinsic validity
of contracts, according to Manresa and
Valverde, the following rules can be followed:
1. The law stipulated by the parties shall
be applied;
2. In default thereof and the parties are
of the same nationality, their national
law shall be applied;
3. If the parties are not of same
nationalities, the law of the place of
the perfection of the obligation shall
govern its essence, and nature of the
place of the performance shall govern
its fulfillment;
4 MEMORY AID IN CIVIL LAW
Personas and Family Relations

Human Relations
ARTICLE 19 Abuse of right. Accion in Rem Verso and Solutio Indebiti
Distinguished
Elements: (LEP)
Solutio Indebiti
1. There is a legal right; Accion in Rem Verso
(Art. 2154)
2. Which is exercised in bad faith; It is not necessary that the Payment was
3. For the sole intent of prejudicing or injuring payment be made by made by mistake
another. mistake, payment could is an essential
have been made element to
knowingly and voluntarily maintain the
1. Doctrine of Volenti non fit injuria (to which but nevertheless, there action for
a person assents is not esteemed in law as would be recovery of what recovery.
injury) has been paid
Refers to self–inflicted injuries or to the
Requisites: (JELA)
consent to injury which precludes the
recovery of damages by one who has 1. Defendant has been ENRICHED;
knowingly and voluntarily exposed himself to 2. Enrichment is without JUST or legal ground;
danger, even if he is not negligent in doing so
(Nikko Hotel Manila Garden, et all vs. Roberto Reyes 3. Plaintiff has suffered a LOSS; and
(Amay Bisaya) G.R. No. 154259, Feb. 28, 2005) 4. He has no other ACTION based on contract,
2. Damnum Absque Injuria (damage without quasi–contract, crime or quasi–delict.
injury)
A person who only exercises his legal rights ARTICLE 36 (Prejudicial Question)
does no injury. However, it cannot be said that
a person exercises a right when he A prejudicial question is defined as that which
unnecessarily prejudices another or offends arises in a case the resolution of which is a
morals or good customs logical antecedent of the issue involved
therein, and the cognizance of which pertains
to another tribunal (Yap v. Paras, GR. No. 101236,
ARTICLE 21 (Acts Contra Bonus Mores) January 30, 1992).
Elements: (L-C-I) GENERAL RULE: If both criminal and civil cases
are filed in court, the criminal case takes
1. There is a legal act; precedence.
2. But which is contrary to morals, customs, EXCEPTIONS:
public order; and,
1. When there is a prejudicial question or a
3. It is done with intent to injure. question that arises in a case, the resolution
• Arts. 19, 20 and 21 are related to one other of which is a logical antecedent of the issue
and under these articles, an act which causes involved herein, and the cognizance of which
injury to another may be made the basis for pertains to another tribunal.
an award of damages. Requisites (Sec. 7, Rule 111, Rules of Court):
• Arts. 19 and 21 refer to intentional acts, while a. Previously instituted civil action involves
Art. 20 pertains either to willful or negligent an issue similar or intimately related to
acts, which must be contrary to law. the issue raised in the subsequent
criminal action, and
ARTICLE 22 (Principle of Unjust b. The resolution of such issue determines
Enrichment) whether or not the criminal action may
proceed
Accion in Rem Verso– action for recovery of
what has been paid without just cause 2. Independent civil action granted by law: (C-
D-Q-R)
APPLICATION:
a. Breach of constitutional and other rights
1. When someone acquires or comes into (Art. 32);
possession of “something” which means
delivery or acquisition of things; and b. Defamation, fraud, physical injuries (Art.
33);
2. Acquisition is undue and at the expense of
another, which means without just or legal c. Refusal or failure of city or municipal
ground police to give protection (Art. 34);
San Beda College of Law 5
2008 CENTRALIZED BAR OPERATIONS

d. Quasi-delict or culpa aquiliana (Art. 2177)

NOTE:
The Civil Code has suppletory application in
matters governed by special laws

Persons
Persons
Civil Personality
Aptitude of being the subject, active or passive, of Modifications/Limitations on Capacity to act:
rights and obligations (FI3T P2A3D)
Juridical Capacity and Capacity to Act 1. Family Relations;
Distinguished 2. Insanity;
JURIDICAL CAPACITY CAPACITY TO ACT 3. Imbecility;
Fitness to be the subject Power to do act with 4. Insolvency;
of legal relations (Art. 37) legal effects (Art. 37)
5. Trusteeship;
Passive Active
6. Penalty;
Inherent Merely acquired
7. Prodigality;
Lost only through death Lost through death and
other causes 8. Age;

Can exist without Cannot exist without 9. Alienage;

capacity to act juridical capacity 10. Absence; and
Cannot be limited or Can be restricted, 11. State of being deaf-mute.
restricted modified or limited

NATURAL PERSONS
THEORIES ON CAPACITY TO ACT Beginning of personality
THEORY OF GENERAL RULE: Birth determines personality
THEORY OF SPECIAL
GENERAL (actual personality) (Art. 40).
CAPACITIES
CAPACITIES
EXCEPTION: The law considers the conceived
Applies to natural Applies to juridical child as born for all purposes FAVORABLE to it if
persons persons born alive. Therefore, the child has a presumed
One has the ability to do This limits the power of personality, which has two characteristics:
all things with legal juridical persons only to 1. limited; and
effects except only those that are expressly
in those specific conferred upon them or 2. provisional/conditional (Quimiguing vs. Icao, G.R.
circumstances those which can be No. L-26795, July 31, 1970)
where the capacity implied therefrom or NOTES:
to act is restrained incidental thereto
The concept of provisional personality CANNOT be
Restrictions on capacity to act: (MID-PC) invoked to obtain damages for and in behalf of an
aborted child (Geluz vs. CA, G.R. No. L-16439, July 20,
1. Minority
1961).
2. Insanity or imbecility
3. State of being deaf mute
When is a Child Considered Born
4. Prodigality
GENERAL RULE: For civil purposes, the fetus is
5. Civil interdiction considered born if it is alive at the time it is
6 MEMORY AID IN CIVIL LAW
Personas and Family Relations
completely delivered from the mother’s
womb.
EXCEPTION: If the fetus had an intrauterine life of
less than 7 months, it is not deemed born if it
dies within 24 hours after its complete delivery
from the maternal womb (Article 41).
Presumption of survivorship
Rules:
Two or more persons, called to succeed each
other, shall be presumed to have died at the same
time, subject to the following conditions:
a. parties are heirs to one another
b. no proof as to who died first
c. with doubt as to who died first
1. if there is doubt, as between two or more
persons who are called to succeed each
other, as to which of them died first,
whoever alleges the death of one prior to
the other, shall prove the same
2. in the absence of proof, the presumption
is that the parties died at the same time
(Article 43)
NOTE:
Art. 43 applies when the parties are called to
succeed each other. But if the parties are not
called to succeed each other, Rule 131, Sec. 3 (jj)
Family Code
Family Code
FAMILY CODE OF THE PHILIPPINES
took effect August 3, 1988
MARRIAGE
A special contract of permanent union between a
man and a woman entered into in accordance with
law for the establishment of conjugal and family
life. Its nature, consequences and incidents are
fixed by law and cannot be the subject of
stipulation (Art. 1).
• Although a marriage contract is considered a
primary evidence of marriage, its absence is
not always proof that no marriage took place
(Balogbog v. CA, G.R. No.! 83598, March 7, 1997).
Once the presumption of marriage arises,
of the Rules of Court applies. Both are to be
applied only in the absence of facts.
JURIDICAL PERSONS
WHO:
a. State and its political subdivisions
b. Corporations, institutions and entities for
public purpose or interest
c. Corporations, partnership and
associations for private interest (Art. 44)
HOW CREATED: For (a) and (b), by the laws
creating or recognizing them; private
corporations are governed by BP 68; and
partnership and associations are governed by
the provisions of this Code concerning
partnerships.
NOTE:
The estate of a deceased should be considered an
artificial or juridical person for the purposes of
the settlement and distribution of his estate
which include the exercise during the judicial
administration thereof of his rights and the
fulfillment of obligations which survived after
his death (Limjoco vs. Intestate Estate of Pedro Fragrante,
No. L–770 April 27, 1948).
Cessation of Civil Personality
1. If natural persons: by death (Art. 42)
2. If juridical persons: by termination of existence
Marriage
other evidence may be presented in support
thereof. The evidence need not necessarily or
directly establish the marriage but must at
least be enough to strengthen the
presumption of marriage. Every intendment of
law leans toward legitimizing marriage (Delgado
vda de De la Rosa v. Heirs of Marciana vda de Damian,
GR No 155733, January 27, 2006)
San Beda College of Law 7
2008 CENTRALIZED BAR OPERATIONS

Marriage and Ordinary Contract Distinguished MARRIAGES BY PROXY

Marriage Ordinary Contract 1. if it was performed in the PHILIPPINES, the

marriage is VOID because physical
Special contract Merely a contract appearance is required under Art. 6
Social institution Merely a contract 2. if performed ABROAD, whether between
Governed by law on Governed by law on Filipinos or foreigners or mixed, the controlling
marriage contracts Article is Art. 26 of the Family Code
Not subject to stipulations Generally subject to
except in property stipulations
PERSONS AUTHORIZED TO SOLEMNIZE MARRIAGES
relations (Art. 7): PMJCCC
Legal capacity is required Minors may contract
thru their parents or 1. Priests, rabbis, and ministers of any church
guardians or in some a. duly authorized by his church or religious
cases by themselves sect
Contracting parties must Two or more parties b. registered with the Office of the Civil
only be two persons – one regardless of gender Registrar General
is a female and the other
2. municipal and city mayors (Local Government Code,
is a male
January 1992)
Can be dissolved only by Can be dissolved by
death or annulment, mutual agreement
• The term “Mayor” includes a Vice-Mayor
not by mutual and by other legal who is the “Acting Mayor” or who is
agreement causes. merely acting as a Mayor
3. Incumbent members of the judiciary
4. Ship captains or air plane chiefs
ESSENTIAL REQUISITES: (LC)
• Only in cases of marriages in articulo
1. Legal capacity of the contracting parties, who mortis between passengers or crew
must be a male and a female members during the voyage
a. any male or female of the age of eighteen 5. Commanders of military unit, in the absence
years or upwards of chaplain
b. not under any impediment mentioned in 6. Consul generals, consuls or vice–consuls
Arts. 37 and 38
a. only in cases provided in Art 10
2. Consent freely given in the presence of a
solemnizing officer (Art. 2) b. consuls on home assignment in the
Philippines cannot solemnize marriage
FORMAL REQUISITES: (ALM)
1. Authority of the solemnizing officer
AUTHORIZED VENUES OF MARRIAGE (Art. 8)
2. Valid Marriage License
GENERAL RULE: Must be solemnized publicly,
3. Marriage ceremony where the contracting and not elsewhere, in the:
parties appear before the solemnizing officer,
with their personal declaration that they take 1. chambers of the judge or in open court
each other as husband and wife in the 2. church, chapel or temple
presence of not less than two witnesses of
legal age (Art. 3) 3. office of consul–general, consul or vice–
consul
Effects:
EXCEPTIONS:
1. Absence of essential or formal requisites
1. marriage in articulo mortis;
The marriage is void ab initio
2. marriage in remote places;
2. Defect in any of the essential requisites
3. marriage at a house or place designated by
The marriage is voidable the parties with the written request to the
3. Irregularity in any of the formal requisites solemnizing officer
Does NOT affect the validity of the marriage NOTE:
BUT will hold the party responsible for such a. this provision is only directory, not mandatory
irregularity liable (Art. 4)
b. the requirement that the marriage be
solemnized in a particular or a public place is
not an essential requisite
8 MEMORY AID IN CIVIL LAW
Personas and Family Relations
FOREIGN MARRIAGES
Validity of Marriage:
GENERAL RULE: Where one or both parties to
the marriage are citizens of the Philippines, the
foreign marriage is valid in this country if
solemnized in accordance with the laws of the
country of celebration.
• in case a Filipino contracts a foreign marriage
which is null and void in the place where it
was solemnized, the same shall also be null
and void in the Philippines even if such was
valid if celebrated under Philippine laws
EXCEPTIONS: Foreign marriages shall not be
recognized in the Philippines if prohibited
because: (B2MA-PIP)
1. contracted by a national who is below 18
years of age
2. bigamous or polygamous (except as
provided in Art. 41, FC)
3. contracted through mistake of one party
as to the identity of the other
4. contracted following the annulment or
declaration of nullity of a previous
marriage but before partition
5. void due to psychological incapacity
6. incestuous
7. void for reasons of public policy
NOTE:
• Two elements for the application of par. 2 of
Art. 26: (a) there is a valid marriage that had
been celebrated between a Filipino citizen
and a foreigner; and (b) a valid divorce is
obtained abroad by the alien spouse
capacitating him or her to remarry.
• The traditional rule is for this provision to be
applicable to valid mixed marriages –
between a Filipino citizen and an alien.
A divorce decree obtained abroad by a
foreigner may be recognized in the
Philippines, provided such decree is valid
according to the national law of the foreigner.
However, the divorce decree and the
governing national law of the alien spouse
who obtained the divorce must be proved
(Garcia v. Receio, G.R. No. 138922, Oct. 2, 2002)
In Rep. vs. Cipriano Obrecido III (GR No.
154380, Oct. 5, 2005), it was held that par. 2 of
Art. 26 of the Family Code is applicable to a
case involving parties who, at the time of the
celebration of the marriage, were Filipino
citizens but later on, one of them becomes
naturalized as a foreign citizen and obtains a
divorce decree.
• The Filipino spouse should likewise be
allowed to re–marry as if the other was a
foreigner at the time of the solemnization of
the marriage. To rule otherwise would
sanction absurdity and injustice.
• The reckoning point is their citizenship at the
time a valid divorce is obtained abroad by the
alien spouse capacitating the latter to re–
marry.
The party pleading it must prove the divorce
as a fact and demonstrate its conformity to
the foreign law allowing it. It must be shown
that the divorce decree allows the former
spouse to remarry as specifically required in
Art 26 (Republic v. Obrecido, GR No 154380 Oct 5,
2005).
In Edgar San Luis v. Felicidad Sagalongos
(G.R. No. 134029, February 6, 2007), whether a
Filipino who had been divorced by his alien
spouse abroad may validly remarry in the
Philippines considering that the marriage was
solemnized before the Family Code, it was
held that it need not retroactively apply the
provisions of the Family Code, particularly
Article 26, par. (2), considering that there is
sufficient jurisprudential basis allowing the
retroactivity of the Family Code.
MARRIAGES EXEMPT FROM
LICENSE REQUIREMENT:
(MOLAR)
1. among muslims or members of ethnic cultural
communities, provided such were solemnized
in accordance with their customs, rites and
practices (Art. 33)
2. solemnized outside the Phil. where NO
marriage license is required by the country
where they were solemnized
3. of a man and a woman who have lived
together as husband and wife for at least 5
years and without legal impediment to marry
each other (Art. 34)
The 5–year period should be computed on the
basis of a cohabitation as husband and wife
where the only missing factor is the marriage
contract to validate the union. This 5–year
period should be the years immediately
before the day of the marriage and it should
be a period of cohabitation characterized by
exclusivity – meaning no third party was
involved at any time within the 5 years and
continuity – that is unbroken (Ninal v. Bayadog,
GR No. 133778, March 14, 2000).
NOTE:
In the case of Manzano v. Sanchez (G.R. No.
MTJ–00–1329, March 08, 2001), the Supreme
Court laid down the requisites to avail of the
exemption under Article 34 of the Family
Code:
a. The man and woman must have been
living together as husband and wife for
San Beda College of Law
at least five years before the marriage;
b. The parties must have no legal
impediment to marry each other;
c. The fact of absence of legal impediment
between the parties must be present at
the time of marriage;
d. The parties must execute an affidavit
stating that they have lived together for
at least five years (and are without legal
impediment to marry each other); and
e. The solemnizing officer must execute a
sworn statement that he had ascertained
the qualifications of the parties and that
he had found no legal impediment to
their marriage
4. in articulo mortis
5. in remote places
NOTE:
A marriage license is valid in any part of the
Philippines only for 120 days from the date of
issue and shall be deemed automatically
cancelled at the expiration of said period (Art.
20)
VOID MARRIAGES (Art. 35)
DUE TO ABSENCE OF ANY OF THE ESSENTIAL
REQUISITES: (BB–LAPIS)
1. Contracted by any party below 18 years of
age even with parental consent;
2. Solemnized by any person NOT LEGALLY
authorized to perform marriages unless one
or both of the parties believed in good faith
that the solemnizing officer had the legal
authority to do so;
3. Solemnized WITHOUT A license except as
otherwise provided;
4. Bigamous or polygamous marriages except
Art 41;
5. Marriages contracted through mistake of one
of the parties as to the IDENTITY of the other
(refers to physical identity);
6. Subsequent marriages that are void under
Article 53 of the Family Code
7. Contracted by a party who at the time of the
marriage was psychologically incapacitated.
NOTE:
Enumeration in Art 35 is not exclusive
PSYCHOLOGICAL INCAPACITY (Art. 36)
• No exact definition but is restricted to
psychological incapacity “to comply with the
essential marital obligations of marriage”
9
2008 CENTRALIZED BAR OPERATIONS
May involve a senseless, protracted and
constant refusal to comply with the essential
marital obligations by one or both of the
spouses although he, she or they are
physically capable of performing such
obligations (Chi Ming Tsoi v. CA, GR No. 119190,
Jan. 16, 1997)
• must be present AT THE TIME of the
celebration of the marriage although it might
have become manifest only after marriage
refers to no less than a mental (not physical)
incapacity that causes a party to be truly
incognitive of the basic marital covenants that
concomitantly must be assumed and
discharged by the parties to the marriage
(Carating–Siayngco v. Siayngco, G.R. No. 158896 Oct 27,
2004)
Essential Elements: (MAVFFCCI)
a. Mental condition
b. Applies to a person who is maritally
contracted to another
c. Marriage entered into with volition
d. Failure to perform or comply with the
essential obligations in marriage
e. Failure to perform is chronic
f. Cause is psychological in nature
g. Cause is serious, with juridical
antecedence, and must be incurable
h. Incapacity results in the failure of the
marriage.
Jurisprudential Guidelines (Republic v. Molina G.R.
No. 108763, February 13, 1997): (PROBE PIG)
1. Plaintiff has burden of proof;
2. Root cause of the psychological incapacity
must be:
a. Medically or clinically identified
b. Alleged in the complaint
c. Sufficiently proven by experts
d. Explained in the decision
3. Incapacity e xisting at the time of the
celebration of marriage;
4. Incapacity must be permanent or incurable;
5. Illness is grave enough to bring about
disability to assume marital obligations;
6. Marital o bligations refer to Art. 68–71,
220,221 and 225 of the FC;
7. Interpretations of the National Appellate
Matrimonial Tribunal of the Catholic Church of
the Philippines while not controlling should be
given great respect;
8. Trial court must order the p rosecuting
attorney or fiscal and the Solicitor General to
appear for the state.
10
Personas and Family Relations
NOTE:
The Molina case was later modified by Marcos v.
Marcos (GR. NO. 136490, October 19, 2000), where the
SC held that psychological incapacity may be
established “by the totality of the evidence
presented” and that there is no requirement that
the respondent be examined by a physician or
psychologist.
Also the Rule promulgated by the SC on 4 March
2003 on Annulment and Declaration of Nullity of
Marriage does not anymore make it mandatory for
the OSG to appear in such cases.
In Noel Buenaventura v. CA, et al., GR No.
127358, March 31, 2005, the SC struck down the
order of the lower court awarding moral damages
against petitioner based on psychological
incapacity, holding that the declaration of
petitioner as psychologically incapacitated,
negated to the petitioner the possibility of
awarding moral damages. The award of moral
damages should be predicated, not on the mere
act of entering into the marriage, but on specific
evidence that it was done deliberately and with
malice by a party who had known of his or her
disability and yet willfully concealed the same.
INCESTUOUS MARRIAGES, WHETHER THE
RELATIONSHIP BE LEGITIMATE OR ILLEGITIMATE,
BETWEEN (Art. 37):
1. Ascendants & Descendants of any degree;
2. Brothers & Sisters whether full or half–blood
ART. 38 THOSE CONTRARY TO PUBLIC POLICY
CONTRACTED BETWEEN: (C-KA3PS3)
1. Collateral blood relatives whether legitimate
or illegitimate up to the 4th civil degree
2. Step–parents & step children
3. Parents–in–law & children–in–law
4. The adopting parent & the adopted child
5. The surviving spouse of the adopting parent &
the adopted child
6. The surviving spouse of the adopted child &
the adopter
7. Adopted child & a legitimate child of the
adopter
8. Adopted children of the same adopter
9. Parties where one, with the intention to marry
the other, killed the latter’s spouse, or his/her
spouse.
There is no need for conviction in a criminal
case of the guilty party. The fact of killing
committed by one of the parties to the
marriage can be proved in a civil case
MEMORY AID IN CIVIL LAW
NOTE:
Under the FC, the following can now marry each
other: (LSG-CA)
a. Brother–in–law and sister–in–law;
b. Stepbrother and stepsister;
c. Guardian and ward;
d. Adopted and illegitimate child of the adopter;
e. Parties who have been convicted of adultery
or concubinage.
VOID SUBSEQUENT MARRIAGES
1. Without judicial declaration of nullity of
previous void marriage (Art. 40)
2. Without judicial declaration of presumptive
death of absent spouse (Art. 41)
3. Where the absent spouse was presumed
dead, and both the present spouse and
would–be spouse were in bad faith in
contracting marriage (Art. 44)
NOTE:
Where there was failure to record in the civil
registry and registry of property the judgment of
annulment or of absolute nullity of the marriage,
partition and distribution of the property of the
spouses and the delivery of the children’s
presumptive legitimes shall not affect third
persons (Arts. 52–53).
Even if a marriage is void, it must first be declared
void before the parties to such void marriage can
remarry. The parties cannot decide for themselves
the invalidity of their marriage. Except, when the
purpose is other than remarriage. In this case, a
collateral attack of the marriage is allowed.
Void and Voidable Marriage Distinguished
VOID VOIDABLE
Decree of nullity Decree of annulment
Incapable of ratification Ratified by free
cohabitation
Can be attacked Can be attacked directly
directly or collaterally only
Co–ownership Conjugal Partnership
Always void Valid until annulled
Action for declaration of Action prescribes
nullity does not
prescribe
JUDICIAL DECLARATION OF NULLITY
The absolute nullity of a previous marriage may
be invoked for purposes of remarriage on the
basis solely of a final judgment declaring such
previous marriage void (Art. 40).
San Beda College of Law
The action or defense for the declaration of
absolute nullity of a marriage shall not
prescribe (Art. 39, as amended by RA NO. 8533
approved on February 23, 1998).
NOTES:
• For purposes of remarriage, the only legally
acceptable basis for declaring a previous
marriage an absolute nullity is a final
judgment declaring such previous marriage
void, whereas, for purposes other than
remarriage, other evidence is acceptable.
Parties to a marriage are not permitted to
judge for themselves its nullity; only
competent courts have such authority. Prior to
such declaration, the validity of the first
marriage is beyond question (Bobis vs Bobis GR.
No. 138509, July 31, 2000). A party who contracts
a second marriage then assumes the risk of
being prosecuted for bigamy.
• In a case for concubinage, the accused need
not present a final judgment declaring his
marriage void, for he can adduce evidence in
the criminal case of the nullity of his marriage
other than proof of a final judgment declaring
his marriage void. Hence, the pendency of the
civil action for nullity of marriage does NOT
pose a prejudicial question in a criminal case
for concubinage.
Interestingly, in Lucio Morigo vs. People, GR
No. 145226, Feb. 6, 2004, the SC ruled that a
judicial declaration of nullity is not needed
where NO MARRIAGE CEREMONY at all
was performed by a duly authorized
solemnizing officer, as where the parties
merely signed a marriage contract on their
own.
BIGAMOUS MARRIAGES (Art. 41)
GENERAL RULE: A marriage contracted by any
person during the subsistence of a previous
valid marriage shall be null and void (Gomez v.
Lipana, GR. No. L–23214, June 30, 1970).
EXCEPTIONS: When the following conditions
concur, the subsequent bigamous marriage shall
be valid: (JAB)
1. Absence of the other spouse must have been
for 4 consecutive years, or 2 years where
there was danger of death
2. Well-founded belief of the present spouse
that absent spouse was already dead
3. Judicial declaration of presumptive death
NOTE:
Art 41 clearly provides that for the purpose of the
present spouse contracting a second marriage, he
or she must file a summary proceeding for the
declaration of the presumptive death of the
absentee without prejudice to the latter’s
reappearance. This is intended to protect the
11
2008 CENTRALIZED BAR OPERATIONS
present spouse from criminal prosecution for
bigamy under Art 349 of the Rev Penal Code.
ART. 41 DECLARATION OF PRESUMPTIVE DEATH
Requisites: (MR–BF)
1. Absentee spouse has been missing for 4
consecutive years or for 2 consecutive
years if the disappearance occurred where
there is danger of death under
circumstances laid down in Art. 391 of the
NCC
2. Present spouse wishes to remarry;
3. Present spouse has a well–founded belief
that the absentee is dead;
4. Present spouse files a summary
proceeding for the declaration of
presumptive death.
NOTE:
The present spouse must establish that he had a
well–founded belief that his absent wife was
already dead.
Effect of Reappearance of Absent Spouse:
GENERAL RULE: The subsequent bigamous
marriage under Article 41 remains valid
despite reappearance of the absentee
spouse.
EXCEPTION: If the reappearance was recorded
in a sworn statement in the civil registry of the
residence of the parties to the subsequent
marriage at the instance of any interested
person with due notice to said spouses, the
subsequent marriage is “automatically
terminated.”
EXCEPTION TO THE EXCEPTION: If there was a
previous judgment annulling or declaring the
first marriage a nullity, the subsequent
bigamous marriage remains valid.
NOTE:
Under the law, if a spouse has been declared
presumptively dead and the present spouse
contracted a subsequent marriage, the same
shall be automatically terminated by the
recording of affidavit of reappearance of the
absent spouse unless previously annulled or
nullified by a previous judgment. If the
absentee reappears, but no step is taken to
terminate the subsequent marriage either by
affidavit or by court action, such absentee’s
mere reappearance, even if made known to
the spouses in the subsequent marriage will
not terminate such marriage (SSS v. Bailon, G.R.
No 165545, March 24, 2006)
Effects of Termination of Subsequent Marriage
(Art. 43): (ICADI)
1. C hildren of the subsequent marriage
conceived prior to its termination shall be
12 MEMORY AID IN CIVIL LAW
Personas and Family Relations

considered legitimate; impotent.

2. Dissolution & liquidation of the absolute Doctrine of Triennial Cohabitation
community or conjugal partnership. If either
Presumption that the husband is impotent
spouse acted in bad faith, his share in the net
should the wife still remain a virgin after 3
profits shall be forfeited:
years of living together with her husband.
a. In favor of the common children;
6. Sexually transmissible disease of either party
b. If none, in favor of the children of the found to be serious and appears to be
guilty spouse by previous marriage; or incurable.
c. In default of children, in favor of the Elements: (ESSA)
innocent spouse;
1. Existing at the time of marriage
3. Donations by reason of marriage remain valid 2. Sexually transmissible disease
except if the donee contracted the marriage in
bad faith; 3. It is serious; and
4. The i nnocent spouse may revoke the 4. Appears incurable
designation of the spouse in bad faith as the
Circumstances Amounting to Fraud Under Art.
beneficiary in any insurance policy; and
46: (NPSD)
5. The spouse who contracted the subsequent
1. Non–disclosure of a previous conviction by
marriage in bad faith shall be disqualified to
final judgment of the other party of a crime
inherit from the innocent spouse by testate or involving moral turpitude;
intestate succession.
2. Concealment by the wife of the fact that at the
NOTE:
time of the marriage, she was pregnant by a
The above effects apply in voidable bigamous man other than her husband;
marriages. Except for (1), the above effects also
3. Concealment of a sexually transmissible
apply to marriages which are annulled or declared
disease, regardless of its nature, existing at
void ab initio under Art. 40 of the Code.
the time of the marriage; and
4. Concealment of drug addiction, habitual
VOIDABLE MARRIAGES (Art. 45) alcoholism, homosexuality or lesbianism
existing at the time of the marriage.
Grounds: (UP–FAVS) must exist AT THE TIME
of marriage NOTES:
1. Age of the party in whose behalf the marriage • Mode of ratification for Nos. 1–4 is FREE
is sought to be annulled was 18 years of age COHABITATION. In Nos. 5 & 6, there is no
or over but below 21, and the marriage was ratification to speak of since the defect is
solemnized without the consent of the permanent. The latter can be convalidated
parents, guardian or person exercising only by prescription. Specifically, in nos. 5 and
substitute parental authority over the party, in 6, the healthy spouse may still annul the
that order; marriage within 5yrs. after celebration.
2. Unsound mind of either party • Misrepresentation as to character, health,
rank, fortune or chastity is not a ground for
3. Fraudulent means of obtaining consent of
annulment.
either party
The enumeration in Art. 46 is EXCLUSIVE
• Only those frauds enumerated in Art. 46 (Anaya vs. Palaroan, GR. No. L–27930, November 26,
4. Vitiated consent of either party through force, 1970).
intimidation or undue influence
Ground Persons Who Prescriptive
5. P hysical incapability of either party to (F2I2NS) May Sue Period
consummate the marriage with the other, and
such incapacity continues and appears to be 1. Force, Injured party W/in 5 years
incurable (impotency) intimidation, from the time
or undue the force,
Requisites for annulment due to influence intimidation, or
Impotence: (CUPIN) undue influence
a. It exists at the time of the celebration of ceased
the marriage; 2. Fraud Injured party W/in 5 years
b. It is permanent; from the
discovery of
c. It is incurable; fraud
d. It is unknown to the other spouse;
e. The other spouse must not also be
San Beda College of Law 13
2008 CENTRALIZED BAR OPERATIONS

Ground Persons Who Prescriptive c. Recording of the judgment of annulment

(F2I2NS) May Sue Period or absolute nullity.
3. Incapability to Injured party W/in 5 years NOTES:
consummate after the • There will be collusion only if the parties had
celebration of arranged to make it appear that a ground
the marriage existed or had been committed although it
4. Insanity (a)sane (a)anytime was not, or if the parties had connived to bring
spouse who before the about a matrimonial case even in the absence
has no death of of grounds therefor (Ocampo vs. Florenciano,
knowledge either party GR. No. L–13553, February 23, 1960).
of the (b)anytime • If the defendant spouse fails to answer the
insanity before the complaint, the court cannot declare him or her
(b)relatives, death of in default but instead, should order the
guardians or either party prosecuting attorney to determine if collusion
persons (c)during lucid exists between the parties.
having legal interval or
charge of the after However, petitioner’s vehement opposition to
insane regaining the annulment proceedings negates the
(c)insane sanity conclusion that collusion existed between the
spouse parties. Under these circumstances, the non–
intervention of a prosecuting attorney to
5. Non– (a)parent/ legal (a)anytime
assure lack of collusion between the
consent guardian before the “no
contending parties is not fatal to the validity of
having consent” party
the proceedings in the trial court (Tuason vs.
charge of the reaches 21
CA, GR. No. 116607, April 10, 1996).
“no–consent” (b)w/in 5 years
party after reaching Rule on Declaration of Absolute Nullity of Void
(b)”no consent 21 Marriages and Annulment of Voidable
“ party Marriages (A.M. 00–11–01–SC)
6.STD Injured party W/in 5 years • This took effect on March 15, 2003.
after the • This Rule shall govern petitions for
celebration of declaration of absolute nullity of void
the marriage marriages and annulment of voidable
NOTE: marriages under the Family Code of the
Philippines.
Whichever comes first may convalidate the
marriage: Cohabitation or Prescription. • The Rules of Court have suppletory
application.
Additional Requirements for Annulment or
Declaration of Nullity • For a more comprehensive discussion on the
procedural aspects of the Rule, please refer
1. Prosecuting attorney or fiscal should: to the Remedial Law Memory Aid.
a. Take steps to prevent collusion between NOTE:
the parties
In case of annulment or declaration of absolute
b. Take care that evidence is not fabricated nullity of marriage, Art.49 of the Family Code
or suppressed grants visitation rights to a parent who is deprived
2. The following must be accomplished: of the custody of the children. Such visitation
rights flow from the natural right of both parents to
a. Partition and distribution of the properties each other’s company. There being no such
of the spouses parent– child relationship between them, Gerardo
b. Delivery of the children’s presumptive has no demandable right to visit the child of Mario
legitimes with Theresa (Concepcion vs. CA GR. No. 12345, August
31, 2005).

EXCLUSIVE GROUNDS: (SAMBA–LIPAD)
1. Repeated physical violence or grossly
abusive conduct directed against the
petitioner, a common child, or a child of the
petitioner
Legal Separation
2. Attempt of the respondent to corrupt or
induce the petitioner, a common child, or a
child of the petitioner, to engage in
prostitution, or connivance in such corruption
or inducement
14 MEMORY AID IN CIVIL LAW
Personas and Family Relations

3. Attempt by the respondent against the life of EFFECTS OF A DECREE OF LEGAL SEPARATION
the petitioner (Art. 63):
4. Final judgment sentencing the respondent to a. The spouses shall be entitled to live
imprisonment of more than 6 years even if separately from each other but the marriage
pardoned bond is not severed.
5. Drug addiction or habitual alcoholism of the b. The absolute community or conjugal
respondent partnership shall be dissolved and liquidated.
6. Lesbianism or homosexuality of the c. The custody of the minor children shall be
respondent awarded to the innocent spouse, subject to
the provisions of Art. 213 of the Code.
7. Abandonment of the petitioner by the
respondent without justifiable cause for more d. The offending spouse shall be disqualified
than 1 year from inheriting from the innocent spouse by
intestate succession, and the provisions in
8. Physical violence or moral pressure to
favor of the offending spouse made in the will
compel petitioner to change religious or
of the innocent spouse shall be revoked by
political affiliation
operation of law.
9. Contracting by respondent of a subsequent
e. The offending spouse shall have no right to
bigamous marriage; and
any share of the net profits of the absolute
10. Sexual infidelity or perversion. community or the conjugal partnership, which
NOTES: shall be forfeited in accordance with Art. 43(2)

Cooling–off Period – 6-month period from the
filing of the petition designed to give the parties
enough time to further contemplate their positions
with the end in view of attaining reconciliation
between them (Art. 58).
f. The innocent spouse may revoke the
donations made by him/her in favor of the
offending spouse, as well as the designation
of the latter as beneficiary in any insurance
policy, even if the designation be irrevocable.
NOTE:

GROUNDS FOR DENIAL OF PETITION (Art. 56):

• The wife who has been granted legal
(C4–MP–DR) separation cannot petition to be allowed to
revert to her maiden name.
a. Condonation
Even if the parents are separated de facto,
NOTE: failure of the husband to look for his still in the absence of judicial grant of custody
adulterous wife is NOT condonation to wife's to one parent, both parents are entitled to the
adultery (Ocampo vs. Florenciano, GR. No. L–13553, custody of their child. The remedy of habeas
February 23, 1960). corpus may be resorted to by the parent who
b. Consent has been deprived of the rightful custody of
the child (Salientes v. Abanilla, GR. No. 162734,
c. Connivance August 29, 2006)
d. Collusion
e. Mutual Guilt EFFECTS OF RECONCILIATION OF THE SPOUSES
f. Prescription (Art. 66):
g. Death of either party during the pendency of a. The legal separation proceedings, if still
the case (Lapuz–Sy vs. Eufemio, GR No. 113842, pending, shall thereby be terminated at
August 3, 1994) whatever stage.
h. Reconciliation of the spouses during the b. The final decree of legal separation shall be
pendency of the case set aside, but the separation of property and
any forfeiture of share of the guilty spouse
already effected shall subsist, unless the
EFFECTS OF FILING PETITION: (LDS) spouses agree to revive their former property
regime.
a. The spouses shall be entitled to live
separately from each other;
b. In the absence of an agreement between the RULE ON LEGAL SEPARATION
parties, the court shall designate the (A.M. 02–11–11–SC)
husband, the wife, or a 3rd person to manage This took effect on March 15, 2003.
the absolute community or conjugal
partnership property (Art. 61). This Rule shall govern petitions for legal
separation under the Family Code in the
c. The husband shall have no more right to have Philippines; the Rules of Court shall apply
sexual intercourse with his wife. suppletorily.
San Beda College of Law 15
2008 CENTRALIZED BAR OPERATIONS

Please refer to the Remedial Law Memory Aid

for the procedural provisions of the Rule.

Rights and Obligations Between Husband and Wife

(JL–FORM)
1. Live together 6. Joint management of the household
2. Observe mutual love, respect & fidelity EXERCISE OF PROFESSION
3. Render mutual help & support GENERAL RULE: Both can engage in any lawful
enterprise or profession without the consent
4. Fix the family domicile
of the other.
5. Joint responsibility for the support of the
EXCEPTION: The other spouse may object only
family
on valid, serious and moral grounds.

Property Relations Between Husband and Wife

GOVERNED BY: b. situated in the foreign country but
executed in the Philippines
1. marriage settlements executed before the
marriage or antenuptial agreements 3. contrary stipulation
2. provisions of the Family Code Modification in the Marriage Settlements
3. local customs (when spouses repudiate GENERAL RULE: must be made before the
absolute community) marriage
4. in the absence of local custom, rules on EXCEPTION: in case of judicial separation of
co– ownership will apply (Art. 74) property during the marriage (Art. 76)
MARRIAGE SETTLEMENT
It is a contract entered into by the future spouses DONATIONS BY REASON OF MARRIAGE
fixing the matrimonial property regime that
Requisites: (COB)
should govern during the existence of the
marriage. 1. made before celebration of marriage
Requisites: (BF-WASP) 2. in consideration of marriage
1. Made before celebration of marriage 3. in favor of one or both of the future spouses
(Art. 82)
2. In writing (even modifications)
Donation Propter Nuptias and Ordinary
3. Signed by the parties
Donations Distinguished
4. Will not prejudice third persons unless
registered in the civil registry DONATIONS
ORDINARY
BASES PROPTER
5. Shall fix terms and conditions of their property DONATIONS
NUPTIAS
relations
Governed by the Governed by
6. Additional signatories rules on ordinary rules on
a. 18–21: parents donations except donations
that if future (Arts. 725–773,
b. civil interdictees & disabled: guardian Formalities
property is NCC)
GENERAL RULE: Property relations shall be donated, it must
governed by Philippine laws, regardless of the conform with
place of the celebration of the marriage or the formalities of wills
parties’ residence (Art. 80). May be donated No limit
EXCEPTIONS: but only up to 1/5 of except that
donor’s present donor shall
1. If both spouses are aliens, even if married Present property if the leave
in the Philippines Property spouses agree on a property
2. As to extrinsic validity of contracts regime other than enough for
absolute his support
a. not situated and executed in the community
Philippines
16 MEMORY AID IN CIVIL LAW
Personas and Family Relations

DONATIONS The property regime of the spouses in the

ORDINARY absence of a marriage settlement or when the
BASES PROPTER
DONATIONS marriage is void. This is so because it is more
NUPTIAS
in keeping with Filipino culture.
May be included Cannot be
Future provided donation included GENERAL RULE: Community property shall
property is mortis causa consist of all property owned by the spouses
at the time of the marriage or acquired
Art. 86, FC Arts. 760, thereafter (Art. 91).
Grounds for
764, & 765, EXCEPTIONS: (BEG)
revocation
NCC
1. property acquired before the marriage by
Rule on Donation Between Spouses During either spouse who has legitimate
Marriage descendants by a former marriage
GENERAL RULE: VOID, either direct or indirect 2. property for personal and exclusive use
donation except jewelry
Rationale: 3. property acquired during the marriage by
gratuitous title, except when the donor,
1. to protect unsecured creditors from being testator or grantor expressly provides
defrauded; otherwise (Art. 92)
2. to prevent stronger spouse from imposing
PRESUMPTION: Property acquired during the
upon the weaker one the transfer of the
marriage is presumed to belong to the
latter’s property to the former;
community, unless otherwise proven (Art. 93).
3. to prevent indirect modification of the
NOTE:
marriage settlement.
No waiver of rights allowed during the marriage
EXCEPTIONS:
except in case of judicial separation of
1. moderate gifts on occasions of family property. The waiver must be in a public
celebrations instrument and recorded in the office of the
local civil registrar where the marriage
2. donations mortis causa
contract was recorded as well as in the proper
NOTE: registry of property (Art. 77).
This rule also applies to common–law spouses Administration and Disposition of the
(Art..87). Community Property
Grounds for Revocation (V-RAL–CN) GENERAL RULE: Administration shall belong to
1. marriage not celebrated or declared Void ab both spouses jointly.
initio except those made in marriage EXCEPTIONS:
settlements
1. In case of disagreement, husband’s
2. marriage without parental Consent decision shall prevail subject to the
3. marriage is Annulled and donee is in bad faith recourse to the court by the wife for a
proper remedy within 5 years from date of
4. upon Legal separation, the donee being the contract
guilty spouse
2. In case one spouse is incapacitated or
5. complied Resolutory condition unable to participate in the administration
6. donee commits acts of Ingratitude (Art. 86) of the common properties, the other
spouse may assume sole powers of
administration (Art. 96).
PROPERTY RELATIONS • These powers do not include:
Governed by: (C3) a. Disposition
a. Contracts between the parties before the b. Encumbrance
marriage
NOTE:
b. Civil Code
Any ALIENATION OR ENCUMBRANCE is void
c. Customs without the written consent of the other
spouse. The transaction, however, shall be
Commences at the precise moment of the
construed as a continuing offer on the part of
celebration of marriage (Art. 88 for ACP and Art. 107
the consenting spouse and the third person
for CPG)
until acceptance by the other spouse or
authorization by the court before the offer is
SYSTEM OF ABSOLUTE COMMUNITY (AC) withdrawn by either or both offerors.
San Beda College of Law
Rule on Game of Chance
• Loss: Shall be borne by the loser–spouse
and shall not be charged to the community
property
• Winnings: Shall form part of the community
property (Art. 95)
EXCEPTION: If said ticket was gratuitously
given by a friend to a spouse, only upon
express provision of the donor will it be
considered part of the community property
Remedies of Present Spouse in case of
Abandonment by the other Spouse
1. receivership
2. judicial separation of property
3. authority to be the sole administrator of the
absolute community (Art. 101)
NOTE:
3 months disappearance without any information
as to a spouse’s whereabouts shall be prima
facie presumption of abandonment of the
other spouse
Steps in Liquidation of AC: (IP–D2PA)
1. Inventory
a. Inventory of Community Property
b. Inventory of the exclusive property of
each spouse.
2. Payment of Community Debts
First, pay out of community assets, if not
enough, husband and wife are solidarily liable
3. Delivery to each spouse of his/her
separate property if any
4. Division of the net community assets
5. Delivery of presumptive legitimes, if any, to
the children
6. Adjudication of conjugal dwelling and lot
(Art. 102)
Grounds for Termination Of Absolute
Community (Art. 99): (LADS)
1. decree of legal separation
2. Annulment or declaration of nullity of
marriage
3. Death of either spouses
4. judicial separation of property
CONJUGAL PARTNERSHIP OF GAINS (CP)
It is that formed by a husband and wife whereby
they place in a common fund the fruits of their
separate property, and the income from their work
or industry, the same to be divided between them
equally (as a general rule) upon the dissolution of
the marriage or the partnership (Art. 106).
17
2008 CENTRALIZED BAR OPERATIONS
Before the presumption that properties acquired
during marriage is presumed conjugal under
Art. 116, there must be proof that the property
was acquired during the marriage. This is a
condition sine qua non for the operation in
favor of conjugal ownership (Metrobank, et al. v.
Tan, GR No. 163712, November 30, 2006).
Properties under Conjugal Partnership: (LC2
FONT)
1. obtained from labor, industry, work or
profession
2. acquired by chance
3. acquired during the marriage by onerous
title with conjugal funds
4. fruits of the conjugal property
5. acquired through occupation
6. net fruits of their exclusive property
7. share of either spouse in hidden treasure
(Art. 117)
Exclusive Property of Each Spouse (Art. 109):
(OGRE)
1. that which is brought to the marriage as his/
her own
2. acquired during the marriage by gratuitous
title
3. acquired by right of redemption, barter or
exchange with property belonging to either
spouse
4. purchased with exclusive money of either
spouse
NOTE:
Transfer of administration of the exclusive
property of either spouse does not confer
ownership of the same (Rodriguez v. De la Cruz, 8 Phil.
665)
Property bought on installments paid partly from
exclusive funds of the spouses and partly form
conjugal funds:
a. If full ownership was vested before the
marriage – it shall belong to the buyer–
spouse
b. If full ownership was vested during the
marriage – it shall belong to the conjugal
partnership (Art. 118)
A wife’s consent to the husbands disposition of
conjugal property does not always have to be
explicit or set forth in any particular document, so
long as it is shown by the acts of the wife that
such consent was indeed given (Pelayo v. CA, GR No
141323 June 8, 2005)
The sale of conjugal property requires the consent
of both spouses; otherwise the sale shall be void,
including the portion of the conjugal property
pertaining to the husband who contracted the sale
18
Personas and Family Relations
(Homeowners and Savings Loan Bank vs. CA,GR No 153802,
March 11, 2005)
Payment of personal debts contracted by either
spouse before or during the marriage shall not be
charged to the conjugal partnership except if it has
redounded to the benefit of the family (Art. 122)
The conjugal partnership is NOT liable for an
indemnity agreement entered into by the husband
to accommodate a third party (Security Bank v. Mar
Tierra Corp., GR No. 143382, November 29, 2006).
Laws on games of chance and in administration
of property in ACP is the same in CPG
Rules in Cases of Improvement Of Exclusive
Property
1. Reverse Accession – if the cost of the
improvement and the plus value are more
than the value of the principal property at the
time of the improvement, the property
becomes conjugal subject to reimbursement
of the value of the principal property to the
owner-spouse.
2. Accession – if the cost of the improvement of
the plus value is equal to or less than the
value of the principal property at the time of
the improvement, the entire property becomes
the exclusive property of the spouse, subject
to reimbursement of the value of the principal
property to the conjugal partnership.
NOTE:
The obligation to reimburse rests on the spouse
upon whom ownership of the entire property
is vested. There is no obligation on the part of
the purchaser of the property in case the
property is sold by the owner-spouse (Ferrer v.
Ferrer, G.R. No. 166496, November 29,2006)
Steps in Liquidation of CP: (DIADO–DLP)
1. Inventory of the Conjugal Partnership of
Gains assets
2. Advances made to each spouse shall be
credited to the conjugal partnership
3. Payment of debts to each spouse
4. Payment of obligations to third parties. If
conjugal assets are insufficient, spouses
are solidarily liable for the balance.
5. Delivery of exclusive properties to the
spouses
6. Payment of losses and deterioration of
movables belonging to each spouse
7. Delivery of presumptive legitimes to the
children.
8. Division of the net conjugal partnership
properties
Charges Upon and Obligations of AC and CP
(Art. 94 and Art. 121):
1. Support of family except for illegitimate
children of either spouse;
MEMORY AID IN CIVIL LAW
2. Debts and obligations contracted:
a. by administrator–spouse for the benefit of
the family;
b. by both spouses; or
c. by one spouse with the consent of the
other;
3. Debts and obligations without marital consent,
provided the family was benefited;
4. All taxes, liens, charges and expenses
including major or minor repairs upon the
conjugal property;
NOTE: However, in conjugal partnership,
actual use of separate property need not be
proved because use and enjoyment of
separate property of the spouses belong to
the partnership.
5. All taxes and expenses for mere preservation
made during the marriage upon the exclusive
property of either spouse used by the family;
In the conjugal partnership, the same
expenses and charges on the conjugal
properties shall be paid by the partnership.
6. Expenses for education or self–improvement
of either spouse;
7. Ante–nuptial debts of either spouse insofar as
they have redounded to the benefit of the
family;
8. The value of what is donated or promised by
both spouses in favor of their common
legitimate children for education or self–
improvement; and
9. Expenses of litigation between spouses
unless found to be groundless.
NOTES:
The separate properties shall be solidarily and
subsidiarily liable for the obligations if the
community or conjugal properties are insufficient.
The absolute community property shall also be
liable for ante–nuptial debts mentioned above,
support of illegitimate children, and liabilities
incurred by either spouse by reason of a crime or
quasi–delict in case of insolvency of the debtor–
spouse. Payment of which shall be advanced by
the absolute community property, subject to
deduction from the share of the debtor–spouse.
The conjugal partnership property shall likewise
be liable for the payment of the personal debts of
either spouse insofar as they have redounded to
the benefit of the family.
Indirect benefits that might accrue to a husband in
his signing a surety or guarantee agreement not in
favor of the family but in favor of his employer
corporation are not benefits that can be
considered as giving a direct advantage accruing
to the family. Hence, the creditors cannot go
against the conjugal partnership property in
satisfying the obligation subject of the surety
San Beda College of Law 19
2008 CENTRALIZED BAR OPERATIONS

agreement. A contrary view would put in peril the 4. rights previously acquired by creditors are not
conjugal partnership property by allowing it to be prejudiced
given gratuitously similar to cases of donation of
conjugal partnership property, which is prohibited.
PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
Support of illegitimate children of either spouse:
In the absolute community, the community is Art. 147 Art. 148
liable in case of insufficiency of exclusive Applicability 1. Parties who Parties do not
property of the debtor-spouse, the same are have the capacity
being considered as advance made by the capacitated to marry due to
Absolute Community to said spouse. to marry but some legal
In the Conjugal Partnership, support of the are NOT impediments (i.e.
illegitimate children may be enforced against married adulterous
the Conjugal Property if all its responsibilities 2. Marriages relationships and
under art. 122 have been covered, if the which are marriages which
debtor spouse has no property or the same is void ab initio are bigamous,
insufficient. ** parties live incestuous, or
exclusively void by reason of
Grounds for termination of CPG are the same as with each public policy
in ACP (LADS) other under Art. 38)
Salaries & Owned in Separately owned
REGIME OF SEPARATION OF PROPERTY Wages equal shares by the parties

Takes place if expressly provided for in the Property Belongs to Belongs to such
marriage settlement or by judicial order after Acquired such party party
the marriage (Art. 134) Exclusively provided there
Causes of Judicial Separation of Property: by Either is proof that
(CLA!PS) Party he/she
acquired it by
a. Petitioner’s spouse has been sentenced with exclusive
a penalty which carries with it civil interdiction; funds
b. Loss of parental authority of the petitioner’s Property Governed by Owned by them in
spouse as decreed by the court; Acquired by the rules on common in
c. petitioner’s spouse has been judicially Both Parties co–ownership proportion to their
declared an absentee; actual respective
contributions of
d. Abandonment by the petitioner’s spouse and money, property
failure to comply with the obligations to the or industry
family;
Presumptio Presumption No presumption of
e. Spouse granted power of administration in n (prima of joint joint acquisition.
marriage settlement abused such power; and facie) acquisition and When there is
f. At the time of the petition, spouses are equal sharing evidence of joint
separated in fact for at least 1 year and the as to property acquisition but
possibility for reconciliation is highly acquired while none as to the
improbable (Art. 135). they live extent of actual
together. contribution, there
NOTE: is a presumption
The spouses contribute to the family expenses of equal sharing.
proportionately with their income and the
value of their properties. However, the liability
of the spouses to the creditors for family
expenses is solidary.
Effects of Judicial Separation of Property
between Spouses
1. the absolute community or conjugal
partnership is dissolved and liquidated
2. the liability of the spouses to creditors shall be
solidary with their separate properties
3. mutual obligation to support each continues
except when there is legal separation
20 MEMORY AID IN CIVIL LAW
Personas and Family Relations

Art. 147 Art. 148 NOTE:

Forfeiture When only one If one of the Under Art. 148, only the properties acquired by
of the parties parties is validly both of the parties through their actual joint
is in good married to contribution of money, property or industry shall
faith, the share another, his/her be owned by them in proportion to their respective
of the party in share in the co– contributions. There is no presumption of joint
bad faith in the ownership shall acquisition. It must be stressed that actual
co–ownership accrue to the contribution is required by this provision, in
shall be absolute contrast to Art. 147 which states that efforts in the
forfeited: community or care and maintenance of the family and
a. in favor of conjugal household, are regarded as contributions to the
their partnership acquisition of common property by one who has
common existing in such no salary or income or work or industry. Under Art.
children; or valid marriage. 148, if the actual contribution of the party is not
b. in default of If the party who proved, there will be no co–ownership and no
or in case of acted in presumption of equal shares. (Agapay v. Palang,
waiver by bad faith is not GR No. 116668, July 28, 1997). Hence, mere
any or all of validly married to cohabitation without proof of contribution will not
the common another or if both result in a co–ownership (Tumlos vs. Fernandez, GR NO.
children or parties are in bad 137650, April 12, 2000).
their faith, such share However, in the case of (Abing v. Waeyan, GR No
descendants shall be forfeited 146294, July 31, 2006) the Supreme Court ruled that
, in favor of in the manner any property acquired by common law spouses
the innocent provided in the during the period of cohabitation is presumed to
party. last paragraph of have been obtained thru their joint efforts and
Art. 147. owned by them in equal shares in the absence of
proof to the contrary. Rules on co ownership
govern their property relations.

The Family
FAMILY 5. Future support
Basic social institution which public policy 6. Future legitime
cherishes and protects; hence, no suit
Family Home
between members of the family shall prosper
unless a compromise between the parties has GENERAL RULE: The family home is exempt
failed. from execution, forced sale or attachment.
Family Relation Includes that: EXCEPTIONS: (PLMN)
1. between husband and wife 1. Debts incurred prior to constitution;
2. between parents and children 2. Debts due to laborers, mechanics,
architects, builders, material men and
3. among ascendants and descendants
others who have rendered service or
4. among brothers and sisters whether full furnished materials for the construction of
or half–blood the building;
Mandatory Prior Recourse to Compromise 3. Debts secured by mortgages on family
No suit between members of the same family shall home;
prosper UNLESS it appears from the verified 4. Non–payment of taxes on home (Art. 155)
complaint or petition that earnest efforts
Guidelines:
toward a compromise have been made, and
that the same have failed. If it is shown that 1. Constituted on the dwelling house of the
no such efforts were, in fact, made, the case family and the land on which house is situated
must be dismissed (Art. 151, NCC).
2. deemed constituted from time of actual
EXCEPTIONS: (CV JAFF) occupation as a family residence
1. Civil status of persons 3. must be owned by person constituting it (may
be either or both spouses or the single head
2. Validity of marriage or a legal separation of a family)
3. Jurisdiction of courts 4. must be permanent
4. Any ground for legal separation 5. rule applies to valid and voidable and even to
San Beda College of Law
common–law spouses under Articles 147 and
148
6. continues despite death of one or both
spouses or unmarried head of the family for
10 years, or as long as a minor beneficiary
lives therein
7. can constitute one (1) family home only
Rule on Children Conceived as a Result of
Artificial Insemination
The status of the child is legitimate if all the
conditions are complied with. The fact that the
husband and wife did not authorize or ratify the
insemination in a written instrument which they
executed and signed before the birth of the child is
only a ground for impugning the child’s legitimate
status.
LEGITIMATE CHILDREN
GENERAL RULE: Those who are conceived or
born during a valid marriage
EXCEPTIONS: (CAVALAC)
Those children who are
1. Conceived as a result of artificial insemination
2. Born of a voidable marriage before decree of
annulment
3. Conceived or born before judgment of
absolute nullity under Art. 36 has become final
& executory
4. Conceived or born of subsequent marriage
under Art. 53
5. Conceived or born of mothers who might have
declared against its legitimacy or was
sentenced as an adultress
6. Legally adopted
7. Legitimated: conceived and born outside of
wedlock of parents without impediment at the
time of conception and had subsequently
married
RULES ON IMPUGNING LEGITIMACY
A. Grounds (PBA)
1. Physical impossibility of the husband to
have sexual intercourse with his wife
within the 1st 120 days of the 300 days
immediately preceding the child’s birth,
due to:
a. physical incapacity of the husband;
b. husband and the wife were living
separately; or
c. serious illness of the husband which
21
2008 CENTRALIZED BAR OPERATIONS
NOTE:
The family home may be alienated, sold, donated,
assigned or encumbered by the owners provided
that the person who constituted the same, his or
her spouse and majority of the beneficiaries give
their consent.
Paternity and Filiation
absolutely prevented sexual
intercourse
2. Biological or scientific proof that the child
could not have been that of the husband;
and
3. written authorization or ratification of
either parent for artificial insemination
was obtained through mistake, fraud,
violence, intimidation or undue influence
(Art. 166).
B. Prescriptive periods for impugning
legitimacy
1. one year, from knowledge of birth or
recording in the civil register, if husband
or heirs live in the SAME city/municipality
2. two years, if both reside in the
Philippines.
3. three years, if the child’s birth took place
or was recorded in the Philippines while
the husband has his residence abroad, or
vice versa (Art. 170)
NOTE:
The question of legitimacy cannot be
collaterally attacked. It can be impugned
only in a direct action.
C. Parties
GENERAL RULE: Only the husband may
impugn
EXCEPTION: The heirs, if the husband dies
before the end of the prescription of the
action, or after filing complaint, or the
child was born after husband’s death (Art.
171)
• An assertion by the mother against the
legitimacy of her child cannot affect the
legitimacy of the child born or conceived
within a valid marriage. A mother has no
right to disavow a child because maternity
is never uncertain (Concepcion v. CA, GR No
123450, August 31, 2005).
22
Personas and Family Relations
RULE ON STATUS OF CHILDREN BORN AFTER 300
DAYS FOLLOWING TERMINATION OF MARRIAGE
A. Requisites (TS–WBN)
1. first marriage terminated
2. mother contracted subsequent marriage
3. subsequent marriage was contracted
within 300 days after termination of
previous marriage
4. child was born
5. no evidence as to status of child
B. Rules as to Whom the Child Belongs
1. to first marriage, if child was born before
the lapse of 180 days after celebration of
2nd marriage, provided it was born within
300 days after termination of the 1st
marriage.
2. to second marriage, if child was born after
180 days following celebration of 2nd
marriage, whether born within 300 days
after termination of 1st marriage or
afterwards (Art. 168).
PROOF OF FILIATION
GENERAL RULE: Filiation of legitimate (or
illegitimate) children is established by any of the
following: (RA)
1. The record of birth appearing in the civil
registry or a final judgment
2. An admission of legitimate (or illegitimate)
filiation in a public document or a private
handwritten instrument and signed by the
parent concerned.
EXCEPTION: In the absence of any of the
foregoing evidence, such legitimate or illegitimate
filiation shall be proved by: (OA)
1. Open and continuous possession of the
status of a legitimate or illegitimate child;
2. Any other means allowed by the Rules of
Court and special laws (Art. 172).
With respect to illegitimate children, the foregoing
evidences can be presented only if the action
to establish filiation is brought only during the
lifetime of the alleged parent
NOTES:
Continuous does not mean that the possession of
status shall continue forever but only that it shall
not be of an intermittent character while it is
continuous. The possession of such status means
that the father has treated the child as his own,
directly and not through others, spontaneously
and without concealment though without publicity.
There must be a showing of permanent intention
of the supposed father to consider the child as his
own by continuous and clear manifestation of
paternal affection and care (Mendoza vs. CA, G.R. No.
MEMORY AID IN CIVIL LAW
86302 September 24, 1991). The paternal affection and
care must not be attributed to pure charity. “Such
acts must be of such a nature that they reveal not
only the conviction of paternity, but also the
apparent desire to have and treat the child as
such in all relations in society and in life, not
accidentally, but continuously” (Jison vs. CA, GR. No.
8454, April 13, 1956).
A child who is conceived or born during the
marriage of his parents is presumed legitimate
and the status and filiation of the child cannot be
compromised (Baluyot v. Baluyot, G.R. No. 33659, June
14, 1990).
Rights of the Children
Legitimate Illegitimate
Use of father & Use of mother‘s surname
mother’s surname NOTE: However, RA
9255 amended Article
176, FC
Receive support from Receive support
parents according to FC
Entitled to the Legitime is ! of the
legitime & other legitime of a legitimate
successional rights child
R.A. NO. 9255
An Act Allowing Illegitimate Children to use the
surname of their Father, amending for the purpose
Article 176 of EO No. 209, otherwise known as the
"FAMILY CODE OF THE PHILIPPINES":
Approved February 24, 2004
Amended Art, 176 of the FC such that illegitimate
children may now use the surname of their father i
if their filiation has been expressly recognized by
the father through the record of birth appearing in
the civil register, or when an admission in a public
document or private handwritten instrument is
made by the father; provided, that the father has
the right to institute an action before the regular
courts to prove non-filiation during his lifetime
ILLEGITIMATE CHILDREN
GENERAL RULE: Those conceived and born
outside a valid marriage are illegitimate (Art. 165).
The above article includes children:
1. born of marriages which are void ab initio
such as bigamous and incestuous
marriages and marriage declared void for
being contrary to law and public policy
2. born after the decree of annulment of a
voidable marriage.
Illegitimate children may use the surname of
their father if:
1. their filiation has been expressly recognized
by the father through the record of birth
San Beda College of Law 23
2008 CENTRALIZED BAR OPERATIONS

appearing in the civil register, or Requisites: (NIM)

2. when an admission in a public document or
private handwritten instrument is made by the
father.
LEGITIMATION
Legitimation is a remedy by means of which those
who, in fact were not born in wedlock and
should therefore be considered illegitimate,
are by fiction considered legitimate. It shall
take place only by the subsequent valid
marriage between parents
a. The child is illegitimate.
b. The parents at the time of the child’s
conception are not disqualified from marrying
each other.
c. There is a valid marriage subsequent to the
child’s birth.
NOTE:
Legitimation may be impugned only by those
whoe are prejudiced in their rights, within 5 years
from the time their cause of action accrues, that is,
from the death of the putative parent.

Adoption
DOMESTIC ADOPTION ACT OF legitimate of his/her Filipino
spouse
1998 (RA No. 8552)TIO
3) One who is married to a Filipino
citizen and seeks to adopt jointly
Who may adopt: (CLEPONG) with his/her spouse a relative
w i t h i n t h e 4th d e g r e e o f
1. Filipino Citizen:
consanguinity or affinity of the
a. Of legal age Filipino spouse
b. In a position to support and care for d. Certified to have legal capacity to
his/her children in keeping with the adopt by his/her diplomatic or
means of the family consular office
c. Good moral character e. Certified by said office that his
government allows the adoptee to
d. In possession of full civil capacity or
enter his country as his adopted child
legal rights
e. At least 16 years older than the 3. Guardian (TC)
adoptee, except when: a. After termination of the guardianship,
1) adopter is the biological parent of with respect to the ward, and
the adoptee b. C learance of his/her financ i a l
2) adopter is the spouse of the accountabilities
adoptee’s parent Pre–Adoption Services
f. Has not been convicted of any crime The DSWD shall provide for the following
involving moral turpitude services:
g. E motionally and psychologically 1. Counseling services for
capable of caring for children
a. biological parents,
2. Alien: (CLEPONG-DELL)
b. prospective adoptive parents and
a. Same qualifications as a Filipino
c. prospective adoptee
b. Country has diplomatic relations with
2. Exhaust all efforts to locate the unknown
the Phil.
biological parents
c. Has been lIiving in the Phil. for at
Rule on Adoption by Spouses
least three (3) continuous years prior
to the application for adoption and GENERAL RULE: The husband and the wife shall
maintains such residence until the JOINTLY adopt.
adoption decree is entered, except
EXCEPTIONS: (LIS)
when
1. One spouse seeks to adopt the
1) A former Filipino citizen who
legitimate child of the other spouse
seeks to adopt a relative within
the 4th degree of consanguinity or 2. One spouse seeks to adopt his/her own
affinity illegitimate child with the consent of the
other spouse
2) One who seeks to adopt the
24
Personas and Family Relations
3. The spouses are legally separated
Who May Be Adopted: (DARILL)
1. Any person below 18 years of age who
has been voluntarily committed to the
DSWD under P.D. 603 or judicially
declared available for adoption
2. Legitimate child of the other spouse
3. Illegitimate child of a qualified adopter to
improve the child’s status
4. a person of legal age, who, prior to the
adoption, has been consistently
considered by the adopter as his/her own
child since minority;
5. child whose adoption has been previously
rescinded
6. child whose biological or adoptive parents
have died, provided that no proceedings
shall be initiated within 6 months from the
time of death of said parents
Consent in Adoption (BAILS)
The WRITTEN CONSENT of the following is
required:
1. the adoptee, if he is 10 years of age or older;
2. Known biological parents or legal guardians
or proper government instrumentality which
has legal custody of the child;
3. Legitimate/Adopted children, 10 years old or
over, of the adopter;
4. the illegitimate children, 10 years old or over,
of the adopter if living with the adopter and
the latter's spouse;
5. Spouse of the adopter and adoptee
NOTE:
An alleged capability to support an adoptee
through the help of another person was denied by
the SC. It was held that adoption is personal
between the adopter and adoptee. The former
should be the one capable of providing financial
support to the latter (Landingin vs Republic, GR No
164948, June 27, 2006).
Sec.9 of RA 8552 provides that if the written
consent of the biological parents cannot be
obtained, the consent of the legal guardian
must be sought. If as claimed by the
petitioner, the biological mother of the minors
had indeed abandoned them, she should
have adduced the written consent of their
legal guardian, but she did not. To dispense
with the requirement of written consent, the
abandonment must be shown to have existed
at the time of adoption and evinces a settled
purpose to forego all parental duties. Indeed
the natural right of a parent to his child
requires that his consent must be obtained
before his parental rights and duties be
terminated and re established in the adoptive
MEMORY AID IN CIVIL LAW
parents (Landingin vs Republic, GR No 164948, June
27, 2006).
Effectivity of Decree of Adoption
a decree of adoption shall be effective as of the
date the original petition was filed. This
applies also in case the petitioner(s) dies
before the issuance of the decree of adoption
to protect the interest of the adoptee.
NOTE:
Where the petition for adoption was granted after
the child had shot and killed a girl, the SC did
not consider the retroactive effect of the
decree of adoption so as to impose a liability
upon the adopting parents accruing at the
time when the adopting parents had no actual
or physical custody over the adopted child.
Retroactive effect may perhaps be given to
the granting of the petition for adoption where
such is essential to permit the accrual of
some benefit or advantage in favor of the
adopted child. To hold that parental authority
had been retroactively lodged in the adopting
parents so as to burden them with liability for
a tortious act that they could not have
foreseen and which they could have
prevented would be unfair and
unconscionable (Tamargo vs. CA, 209 SCRA 518,
G.R. No. 85044 June 3, 1992).
Effects of Adoption: (SAL)
1. Severance of legal ties between the
biological parents and the adoptee, which
shall be vested in the adopters.
EXCEPTION: if the biological parent is
the spouse of the adopter
2. Adoptee shall be considered as a
legitimate child of the adopter(s) for all
intents and purposes.
3. In legal or intestate succession, the
adoptee and the adopter(s) shall have
reciprocal rights of succession without
distinction from legitimate filiation.
However, if there is a will, the rules on
testamentary succession shall be followed.
Rescission of Adoption: Grounds: (ASAR)
1. Attempt on the life of the adoptee
2. Sexual assault or violence
3. Abandonment and failure to comply with
parental obligations
4. Repeated physical or verbal maltreatment by
the adopter despite having undergone
counselling
NOTE:
An adoptee refused to use the surname of the
adopter though already adopted. The adopter
sought to rescind/revoke the Decree of
Adoption (DOA), but the Domestic Adoption
Act (RA No. 8552) which removes the right of
San Beda College of Law
adopter to challenge the validity of the DOA
became effective. SC held that the adopter
may disinherit the adoptee, and that the latter
has the sole right to challenge the DOA
(Lahom v. Sibulo, GR No 143989, July 14, 2003).
Disinheritance of Adoptee by Adopter:
Grounds (Art. 919, NCC): (GAMM-CARD)
1. Groundless accusation against the testator
of a crime punishable by six (6) years or
more imprisonment
2. Found guilty of an attempt against the life
o f t h e t e s t a t o r, h i s / h e r s p o u s e ,
descendants or ascendants
3. Causes the testator to make or changes a
testator ’s will through violence,
intimidation, fraud or undue influence
4. Maltreatment of the testator by word or
deed
5. Conviction of a crime which carries the
penalty of civil interdiction
6. Adultery or concubinage with testator’s
spouse
7. Refusal without justifiable cause to support
the parent or ascendant
8. leads a dishonorable or disgraceful life.
Effects: (PAROS)
a. Parental authority of adoptee’s biological
parents or legal custody of DSWD shall be
restored if adoptee is still a minor or
incapacitated.
b. Reciprocal rights and obligations of the
adopter(s) and the adoptee to each other
shall be extinguished.
c. Amended certificate of birth of the adoptee
shall be cancelled and its original shall be
restored.
d. Succession rights shall revert to their status
prior to the adoption, but vested rights shall
not be affected.
NOTE:
Being a legitimate child by virtue of adoption, it
follows that the child is entitled to all the rights
provided by law to a legitimate child. The adopted
child remains an intestate heir of his/her biological
parents. Hence, she can well assert her hereditary
rights from her natural mother in the future. In
addition, the law being silent, SC allowed the use
of the mother’s name as her middle name (In the
matter of adoption of Stephanie Nathy Astorga
Garcia, GR No 148311 March 31, 2005)
INTER–COUNTRY ADOPTION
ACT OF 1995 (RA No. 8043)
The socio–legal process of adopting a Filipino
child by a foreigner or a Filipino citizen
25
2008 CENTRALIZED BAR OPERATIONS
permanently residing abroad where the
petition is filed, the supervised trial custody is
undertaken, and the decree of adoption is
issued outside the Philippines.
Who May Be Adopted:
Only a “legally–free child” may be the subject of
inter–country adoption
NOTE:
• “Legally–free Child” – a child who has
been voluntarily or involuntarily committed
to the DSWD of the Philippines, in
accordance with the Child Youth and
Welfare Code.
• No child shall be matched to a foreign
adoptive family unless it is satisfactorily
shown that the child cannot be adopted
locally.
• There shall be no physical transfer of a
voluntarily committed child earlier than six
(6) months from the date of execution of
Deed of Voluntary Commitment except:
1. adoption by a relative
2. children with special medical
conditions
Who May Adopt under Inter-Country Adoption
1. Any alien or
2. Filipino citizen, both permanently residing
abroad
Conditions: (PD-CAN-JERQ)
1. At least 27 years of age and at least 16
years older than the child to be adopted, at
the time of the application unless the
adopter is:
• parent by nature of the child to be
adopted or
• spouse of such parent
2. If married, his/her spouse must jointly file
for the adoption
3. Capacity to act and assume all rights and
responsibilities of parental authority under
his/her national laws, and has undergone
the appropriate counselling from an
accredited counsellor in his/her country
4. Has not been convicted of a crime involving
moral turpitude
5. Eligible to adopt under his/her national law
6. In a position to provide the proper care and
support and to give the necessary moral
values and examples to all his children,
including the child to be adopted
7. Agrees to uphold the basic rights of the
child as embodied under Philippine laws,
the U.N. Convention on the Rights of a
Child, and to abide by the rules and
26
Personas and Family Relations
regulations issued to implement the Inter–
Country Adoption Act
8. Comes from a country with whom the
Philippines has diplomatic relations and
whose government maintains a similarly
authorized and accredited agency and that
adoption is allowed under his/her national
laws
9. Possesses all the qualifications and NONE
OF THE DISQUALIFICATIONS under the
Inter–Country Adoption Act and other
applicable Philippine laws
Inter–Country Adoption Board
• acts as the central authority in matters
relating to inter–country adoption.
• The Board shall ensure that all possibilities
for the adoption of the child under the
Family Code have been exhausted and
that inter–country adoption is in the best
interest of the child.
Trial Custody:
1. 6 months from the time of placement
3. starts upon actual physical transfer of the
child to the applicant who, as actual
custodian, shall exercise substitute parental
authority over the person of the child.
4. The adopting parent(s) shall submit to the
governmental agency or authorized and
accredited agency, which shall in turn transmit
a copy to the Board, a progress report of the
child’s adjustment.
NOTES:
1. If the pre–adoptive relationship is found
Everything indispensable for sustenance,
dwelling, clothing, medical attendance, education
and transportation in keeping with the financial
capacity of the family.
It shall be in proportion to the resources or means
of the giver and to the necessities of the
recipient.
Kinds: (LJC)
1. Legal – one required or given by law;
2. Judicial – required by the court to be given
whether pendente lite or in a final
judgment;
3. Conventional – given by agreement.
Characteristics: (MR P2INE)
1. Personal
2. Intransmissible
3. Not subject to waiver or compensation
4. Exempt from attachment or execution
MEMORY AID IN CIVIL LAW
unsatisfactory by the child or the applicant
or both, or if the foreign adoption agency
finds that the continued placement of the
child is not in the child’s best interest, said
relationship shall be suspended by the
Board and the foreign adoption agency
shall arrange for the child’s temporary
care.
2. If a satisfactory pre–adoptive relationship
is formed between the applicant and the
child, the Board shall submit the written
consent to the adoption to the foreign
adoption agency within 30 days after
receipt of the latter’s request.
3. A copy of the final decree of adoption of
the child, including certificate of
citizenship/naturalization whenever
applicable, shall be transmitted by the
foreign adoption agency to the Board
within 1 month after its issuance.
Presumption of Illegal Adoption: (CPEN)
1. Consent for adoption was acquired through or
attended by coercion, fraud, improper material
inducement
2. Procedures and safeguards provided by law
for adoption were not complied with
3. Has exposed or subjected the child to be
adopted to danger, abuse or exploitation
4. No authority to effect adoption from the Board
NOTE:
For a comprehensive discussion of the procedural
aspects of adoption, please refer to A.M. No. 02–
06–02–SC or the Remedial Law Memory Aid
Support
5. Reciprocal on the part of those who are by
law bound to support each other
6. Provisional character of support judgment
7. Mandatory
Persons Obliged to Support Each Other:
1. Spouses
2. Legitimate ascendants and descendants
3. Parents and their legitimate children, and
the legitimate and illegitimate children of
the latter
4. Parents and their illegitimate children, and
the legitimate and illegitimate children of
the latter
5. Legitimate brothers and sisters whether
full or half–blood (Art. 195)
Order of Liability if Several Persons are
Obliged to Give Support: (SDAB)
1. Spouse
San Beda College of Law 27
2008 CENTRALIZED BAR OPERATIONS

2. Descendants in the nearest degree
3. Ascendants in the nearest degree
4. Brothers and sisters (Art. 199)
NOTES:
If the obligation to give support falls upon two or
more persons, payment shall be divided between
them in proportion to their resources. In case of
urgent need and special circumstances, the court
may order one of them to furnish the support
provisionally subject to the right to claim from the
others the share due them.
When two or more recipients at the same time
claim for support and the obligor does not have
sufficient means to satisfy all claims:
a. The order of liability provided by law shall be
followed.
b. If the concurrent obligees should be the
spouse and a child subject to parental
authority, the child shall be preferred.

Parental Authority
It is the sum total of the right of the parents over NOTES:
the persons and property of their
Parental authority and responsibility are
unemancipated children.
inalienable and may not be transferred and
Rules as to the Exercise of PA: renounced except in cases authorized by law.
1. JOINT parental authority by the father and Parents may exercise parental authority over
mother over the persons of their common their child’s property
children. In case of disagreement, the father’s
Kinds of Properties of a Minor
decision shall prevail UNLESS there is a
judicial order to the contrary (Art. 211) ADVENTITIOUS PROFECTITIOUS
2. If the child is illegitimate, parental authority is earned or acquired by the property given by the
with the mother. child through his work or parents to the child
Parental Preference Rule industry by onerous or for the latter to
gratuitous title administer
The natural parents, who are of good moral
character and who can reasonably provide for owned by the child owned by the
the child, are ordinarily entitled to custody as parents
against all other persons. child is also the parents are the
usufructuary, but the usufructuary
Rule in Case of Legal Separation of Parents:
child’s use of the property
Parental authority is exercised by the parent shall be secondary to the
designated by the court. collective daily needs of
GENERAL RULE: No child under 7 years of age the family
shall be separated from the mother. property administered by property
the parents administered by the
EXCEPTION: When the court finds compelling
child
reason to order otherwise.
NOTE: Grounds for Suspension of PA: (CHOBAN)
Paramount consideration in matters of custody of 1. Conviction of a crime with the penalty of
a child is the welfare and well–being of the civil interdiction
child. 2. Harsh or cruel treatment against the child
Persons Exercising Substitute PA (Art. 216): 3. Orders, counsel and example which are
1. Surviving grandparent corrupting, given by the person exercising
authority
2. Oldest brother or sister over 21 years of
age unless unfit or disqualified 4. Child is compelled to beg
3. Actual custodian unless unfit or 5. Subjecting child or allowing child to
disqualified subjected acts of lasciviousness,
Persons Exercising Special PA (Art. 218): 6. Negligence, which is culpable, committed
by the person exercising authority (Art. 231)
1. School
2. Administrators and teachers
3. Individual, entity or institution engaged in child
care
28 MEMORY AID IN CIVIL LAW
Personas and Family Relations

Termination of Parental Authority • Nationality

PERMANENT TEMPORARY • Status

1. death of the parents 1. adoption of the child change of first name or nickname
2. death of the child 2. appointment of a NOTE:
general guardian Correction or change can be made by the
3. emancipation of the 3. judicial declaration of concerned city or municipal civil registrar or consul
child abandonment general in accordance with the provisions of this
Act and its implementing rules and regulations.
4. If child is subjected to 4. final judgment
sexual abuse (Art. 228) divesting the parents The State has an interest in the names borne by
of parental authority individuals and entities for purposes of
5. judicial declaration of identification. A change of name is a privilege,
absence or incapacity not a right (Silverio v. Republic, GR NO. 174689,
of the parents October 22, 2007).
exercising parental Grounds for Change of First Name or
authority over the Nickname: (HAR)
child (Art. 229) • First name or nickname is ridiculous, tainted
Change of First Name or Nickname under R.A. with dishonor or extremely difficult to write or
No. 9048 (An Act authorizing City or Municipal pronounce;
Civil Registrar or the Consul General to • New first name or nickname has been
Correct a Clerical or Typographical Error in an habitually and continuously used by the
Entry and/or Change of First Name or petitioner and he has been publicly known by
Nickname in the Civil Registrar Without need that first name or nickname in the community;
of a Judicial Order, Amending for this Purpose or
Arts. 376 and 412 of the Civil Code)
• The change will avoid confusion
Authority to Correct Clerical or Typographical
Error and Change of First Name or Nickname: NOTE:

GENERAL RULE: No entry in a civil register shall RA 9048 does NOT sanction a change of first
be changed or corrected without a judicial name on the ground of sex reassignment. To rule
order otherwise may create grave complications in the
civil registry and public interest (Republic v. CA, GR
EXCEPTION: NO. 97906, May 21, 1992).
clerical or typographical errors except: Please refer to REMEDIAL LAW MEMORY AID
(SANS) for a comprehensive discussion of the procedural
• Sex aspects of change of name.
• Age

Citizenship and Domicile

Residence and Domicile Distinguished person at birth.

RESIDENCE DOMICILE 2. Domicile of choice – the domicile freely

chosen by a person sui juris.
Indicates a Denotes a FIXED
PLACE OF PERMANENT 3. Constructive domicile – assigned to a
ABODE, whether RESIDENCE, which child by law after his birth on account of a
permanent or when absent, one has legal disability like minority, insanity, etc.
temporary the intention of returning C. Requirements for the Acquisition of New
There can be There can only be ONE Domicile
several places of place of domicile 1. bodily presence in a new locality
residence
2. intention to remain therein (animus
A. Elements of Domicile manendi)
1. Physical presence in a fixed place 3. intention to abandon the old domicile
(animus non revertendi).
2. Intention to remain permanently in said
place (animus manendi)
B. Kinds of Domicile
1. Domicile of origin – Given by law to a
San Beda College of Law 29
2008 CENTRALIZED BAR OPERATIONS

General Guidelines
1. Duty and right to make arrangement about
funerals is in accordance with right and duty
to support under Article 199, FC
2. the funeral shall be in keeping with the social
position of the deceased
3. the funeral shall be in accordance with the
expressed wishes of the deceased
a. in the absence of the expressed wishes,
Funerals
his religious beliefs or affiliation shall
determine
b. in case of doubt, the persons in Article
199, FC shall decide
4. any person who disrespects the dead or
allows the same shall be liable for damages
5. If the deceased is married, the tombstone or
mausoleum is deemed a part of the funeral
expense and chargeable against the
community or conjugal partnership property

Absence
The legal status of a person who has absented Different Stages of Absence: (PDP)
himself from his domicile and whose
1. Provisional absence
whereabouts and fate are unknown, it not
being known with certainty whether he is still When a person disappears from his domicile,
living or not. his whereabouts being unknown, without
leaving an agent to administer his property
Declaration of Absence
2. Declared absence
WITHOUT WITH
ADMINISTRATOR ADMINISTRATOR When a person disappears from his domicile,
and two years have elapsed without any news
2 years from the 5 years, if the absentee about him or since the receipt of the last
lapse of time left an administrator to news, or five years have elapsed in case he
without news about his property from the left a person to administer his property
the absentee or lapse of time without
since the receipt of news about his 3. Presumptive Death
the last news absentee or since the When the absentee is presumed dead
receipt of the last news

Presumption of Death (Arts. 390 to 392, NCC)

ORDINARY EXTRAORDINARY/
ABSENCE QUALIFIED ABSENCE
a. After absence of 7 For all purposes including
YEARS, person those of opening
presumed dead succession, a period of 4
for all purposes YEARS, and for purposes
except for those of of remarriage of the
opening spouse present, a period
succession of 2 YEARS, are
b. Absence of 10 sufficient under the
YEARS, person following circumstances:
presumed dead a. person on board a
for purposes of vessel lost during a sea
opening voyage or an aeroplane
succession except which is missing;
if he disappeared period is counted from
after the age of the loss of the vessel or
75, in which case, aeroplane
a period of 5 b. person in the armed
years is sufficient forces who had taken
c. Absence of 4 part in war
YEARS, person c. person in danger of
presumed dead death under other
for purposes of circumstances and his
remarriage of the existence has not been ! END OF PERSONS AND
spouse present known FAMILY RELATIONS "
30 MEMORY AID IN CIVIL LAW
Property

CIVIL LAW
PROPERTY
PROPERTY
PROPERTY Requisites/Characteristics: (USA)
All things which are, or may be, the object of 1. UTILITY – ability to serve as a means to
appropriation (Art. 414, NCC) satisfy human needs
Thing and Property Distinguished 2. SUBSTANTIVITY OR INDIVIDUALITY –
separate and autonomous existence
Thing Property
3. APPROPRIABILITY – even if not yet
includes both things which are susceptible actually appropriated (Reyes-Puno, p.1)
appropriable to appropriation and which
and non- are already possessed and
appropriable found in the possession of
objects man
• The New Civil Code uses these terms
interchangeably.

Classification of Property
Kinds of Properties: 4. Capacity to Alienate : greater capacity is
usually required for immovables
1. Immovable or real (Art. 415)
5. As to foreign law : Movables follow the
2. Movable or personal (Arts. 416, 417)
owner; immovables are governed by lex
Difference in Regime between Movables and rei sitae.
Immovables
6. Venue is usually determined by the
1. Solemnity is greater in acts relative to location of the immovable (Reyes-Puno. p.5).
immovables.
2. Adverse Possession is no longer for
immovables. IMMOVABLE PROPERTIES
3. Publicity and Recording are more
important for immovables. As to movables, Categories: (NIDA)
possession is equivalent to title.
1. REAL BY NATURE – it cannot be carried
from place to place (pars. 1 & 8, Art. 415)

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
San Beda College of Law
2. REAL BY INCORPORATIOn – attached to
an immovable in a fixed manner to be an
integral part thereof (pars. 1–3 Art. 415)
3. REAL BY DESTINATION – placed in an
immovable for the utility it gives to the
activity carried thereon (pars. 4–7 and 9 Art.
415)
4. REAL BY ANALOGY – it is so classified by
express provision of law (par. 10, Art. 415)
TYPES OF IMMOVABLE PROPERTIES (Art. 415)
1. Land, buildings, roads and constructions
of all kinds adhered to the soil
• Where a building is sold to be demolished
immediately, the sale involves movable
property (i. e. the materials).
• Buildings are immovables by
incorporation. Hence, their adherence to
the land must be permanent and
substantial. Portable structures are not
immovables.
2. Trees, plants, and growing fruits while they
are attached to the land or form an integral
part of an immovable
• When trees are cut or uprooted,
incorporation ceases and they become
movables; timber is still integral part of an
immovable property when it constitutes
the natural product of the latter.
3. Things incorporated – everything attached
to an immovable in a fixed manner, in such a
way that it cannot be separated therefrom
without breaking the material or the
deterioration of the object.
• The attachment need not be made by the
owner.
• The breakage or injury in case of
separation must be substantial.
4. Fixtures and Ornaments
Requisites:
a. Placed by the owner or by a tenant as
agent of the owner
b. With the intention of attaching them
permanently, even if adherence will not
involve breakage or injury
5. Machinery and Equipment
Requisites for Par. 5, Art. 415:
c. The machinery, etc. must be placed by
the owner of the tenement or his agent;
d. The industry or works must be carried on
in a building or on a piece of land;
e. The machinery, etc. must tend directly to
meet the needs of the said industry or
works.
31
2008 CENTRALIZED BAR OPERATIONS
6. Animal Houses and Animals therein
• Placed by the owner, or by a tenant as
agent of the owner with the intention of
permanent attachment.
7. Fertilizer that is actually used or spread
over the land
8. Mineral Deposits and Waters – mines,
quarries, and slug dumps, while the matter
forms part of the bed, and waters, either
running or stagnant.
9. Docks and Fixed Floating Structures
• However, vessels are considered
personal property under the Civil Law as
under the common law, although
occasionally referred to as a peculiar kind
of personal property. (Phil.. Refining Co., Inc. v.
Jarque, GR No. 41506, March 25, 1935)
10. Realty by analogy – contracts for public
works, and servitudes and other real right
over immovable property.
MOVABLE PROPERTIES
Tests:
a. By exclusion: movables are everything
not included in Art. 415 such as ships or
vessels or interest in a business.
b. By description: an object is movable if:
1. It can be transported from place
to place; It can change location
2. Without substantial injury to the
immovable to which it is attached.
c. Real Property considered as personal
property by special provision of law.
Kinds of Movable Properties (Arts. 416–417):
(FASTOS)
1. Those movables susceptible of
appropriation which are not included in the
preceding article
2. Real property which by any special
provision of law is considered personalty
3. Forces of nature which are brought under
control by science
4. In general, all things which can be
transported from place to place without
impairment of this real property to which
they are fixed (Art. 416).
5. Obligations and actions which have for
their object movable or demandable sums
6. Shares of agricultural, commercial and
industrial entities, although they may have
real estate (Art. 417).
32
Property
CLASSIFICATIONS OF MOVABLES
1. By Nature:
Consumable - cannot be used according
to its nature without it being consumed.
Non-consumable - any other kind of
movable property (Art. 418).
2. By Intention:
Fungible - replaceable by an equal quality
and quantity, either by nature of things or
agreement.
Non-fungibles - irreplaceable, because
identical objects must be returned.
Note: The Civil Code, in many instances, uses
the words consumable and fungible
interchangeably.
IMPORTANT DOCTRINES/PRINCIPLES ON IMMOVABLE
AND MOVABLE PROPERTIES
! A Building is an immovable even if not
erected by the owner of the land. The only
criterion is union or incorporation with the
soil. (Ladera v. Hodges, 48 O.G. 4374).
! A building is real property, therefore, its sale
as annotated in the Chattel Mortgage Registry
cannot be given the legal effect of registration
in the Registry of Real Property (Leung Yee v.
Strong Machinery Co., GR No. L-11658, February 15,
1918).
! Parties to a contract may treat as personal
properties that which by nature are real
properties; and it is a familiar phenomenon to
see things classed as real property for
purposes of taxation which on general
principle might be considered personal
property (Standard Oil Co. v. Jaranillo, GR No. 20329,
March 16, 1923).
! The fact that the machineries were bolted or
cemented on real property mortgaged does
not make them ipso facto immovable under
Art. 415 (3) and (5) as the parties intent has to
be looked into. Even if the properties appear
to be immovable by nature, nothing detracts
the parties from treating them as chattels to
secure an obligation under the principle of
estoppel (Tsai v. Court of Appeals, GR No. 120098, 2
October 2001).
! For purposes of attachment and execution
and for purposes of the Chattel Mortgage
Law, ungathered products have the nature
of personal property (Sibal v. Valdez, GR No.
L-27352 August 4, 1927).
! The human body, whether alive or dead, is
neither real nor personal property, for it is not
even property at all, in that it generally cannot
be appropriated. Under certain conditions, the
body of a person or parts thereof may be
subject matter of a transaction (See RA No. 349,
MEMORY AID IN TAXATION LAW
RA No. 7170, RA No. 7719).
! There are 2 views on the effect of the
temporary separation of movables from the
immovables to which they have been
attached:
a. They continue to be regarded as
immovables.
b. Fact of separation determines the
condition of the objects thus recovering
their condition as movables.
• The latter view is supported by Paras and
Tolentino.
• If the machine is still in the building, but is
no longer used in the industry, the
machine reverts to the condition of a
chattel. Upon the other hand, if still
needed for the industry, but separated
from the tenement temporarily, the
property continues to be immovable,
inasmuch as paragraph 5 refers, not to
real property by incorporation, but to real
property by destination or purpose (Paras,
p.20).
NOTE:
Art. 415 (5) – Machinery movable in nature
becomes immobilized when placed on a plant by
the owner of the property or plant, but not so
when placed by a tenant, usufructuary or a person
having only a temporary right unless such person
acted as agent of the owner (Davao Sawmill Co. v.
Castillo, GR No. 40411, August 7, 1935). Thus, where a
tenant places the machinery under the express
provision of lease that it shall become a part of
the plant belonging to the owner upon the
termination of the lease without compensation to
the lessee, the tenant acts as as an agent of the
owner and the immobilization of the machineries
arises from the act of the owner in giving by a
contract a permanent destination to the machinery
(Valdez v. Central Altagracia, 225 U.S. 58).
PROPERTY IN RELATION TO WHOM IT BELONGS
(Arts. 419–425)
Property is either of:
1. public dominion
2. private ownership
I.
PROPERTY OF PUBLIC DOMINION
Concept: It does not import the idea of
ownership. It is not owned by the state but
simply under its jurisdiction and
administration for the collective enjoyment
of people. The ownership of such properties
is in the social group, whether national,
provincial or municipal.
San Beda College of Law
Purpose: To serve the citizens and not the state
as a juridical person.
Kinds:
1. For public use – may be used by
anybody
2. For public service – may be used only
by authorized persons
3. For the development of the national
wealth
Characteristics: (OI-APE)
1. Outside the commerce of man
2. Inalienable. But when it is no longer
needed for public use or service, it may
be declared patrimonial property.
3. Cannot be acquired by prescription
4. Not subject to attachment or execution
5. Cannot be burdened with easements
NOTE: They cannot be registered under the
land registration law and be the subject of a
Torrens title. The character of public property
is not affected by possession or even a
Torrens Title in favor of private persons (Palanca
v. Commonwealth, 69 Phil.. 449).
PATRIMONIAL PROPERTY OF THE STATE
1. Property of the State owned in a private or
proprietary capacity
2. Property of public dominion, when no longer
intended for public use or public service, shall
form part of the patrimonial property (Art. 422)
3. The state has the same rights over this kind of
property as a private individual in relation to
his own private property
PROPERTY OF LGUS
1. Property for public use – consist of roads,
streets, squares, fountains, public waters,
The right to enjoy, dispose, and recover a thing
without further limitations than those established
by law or the will of the owner.
Kinds of ownership:
1. Full Ownership - includes all the rights of
an owner.
2. Naked Ownership - the right to use and
the fruits have been denied.
3. Sole Ownership - vested in only one
person.
33
2008 CENTRALIZED BAR OPERATIONS
promenades and public works for public
service paid for by the LGUs
2. Patrimonial Property – all other properties
possessed by LGUs without prejudice to
provisions of special laws
NOTES: The Supreme Court categorically stated
that “this court is not inclined to hold that
municipal property held and devoted to public
service is in the same category as ordinary private
property. The classification of municipal property
devoted for distinctly governmental purposes as
public should prevail over the Civil Code in this
particular case” (Province of Zamboanga Del Norte v. City
of Zamboanga, GR No. L-23922. June 30, 1969). Here, the
Law of Municipal Corporations was considered as
a special law in the context of Art. 424 of the NCC.
The difference between properties of public
dominion of the State and LGUs is immediately
noticeable because the only property of public
dominion are properties for public use. Since
properties for public service are excluded, the
conclusion is that these properties for public
service are considered patrimonial properties
because par. 2 of Art. 424 provides (Aquino. p.93).
II.
PROPERTY OF PRIVATE OWNERSHIP
All properties belonging to private persons and
those belonging to the State and any of its political
subdivisions which are patrimonial in nature.
Muebles or furniture generally has for its principal
object the furnishing or ornamenting of a building.
Note that there are exceptions to this definition
and are generally not included as furniture unless
the law or the individual’s declaration include
them.
Ownership
4. Co-ownership - vested in two or more
owners.
Rights Included:
1. Right to enjoy: (PUFA)
a) to possess (jus possidendi)
b) to use (jus utendi)
c) to the fruits (jus fruendi) and
accessions
d) to abuse (jus abutendi)
34 MEMORY AID IN TAXATION LAW
Property

2. Right to dispose: (DATE) repel or prevent actual or threatened

unlawful physical invasion or usurpation of his
a) to destroy
property.
b) to alienate
Requisites: (RONA)
c) to transform
1. Reasonable force
d) to encumber
2. Owner or lawful possessor is the person
3. Right to vindicate: (RP) who will exercise
a) pursuit 3. No delay in one’s exercise
b) recovery 4. Actual or threatened physical invasion or
4. Right to exclude: (ER) usurpation

a) to enclose, fence and delimit

b) to repel intrusions even with force
Characteristics: (GEEPI)
1. OWNERSHIP IS ELASTIC – power/s may
be reduced and thereafter automatically
recovered upon the cessation of the
limiting rights.
DOCTRINE OF INCOMPLETE PRIVILEGE OR STATE OF
NECESSITY (Art. 432)
GENERAL RULE: A person cannot interfere with
the right of ownership of another.
EXCEPTION: Doctrine of Incomplete Privilege or
State of Necessity

2. GENERAL – the right to make use of all the Requisites: (ID)

possibilities or utility of the thing owned,
except those attached to other real rights
existing thereon.
3. EXCLUSIVE – there can only be one
ownership over a thing at a time. There
may be two or more owners but ONLY
ONE ownership.
4. INDEPENDENCE – it exists without
necessity of any other right
5. PERPETUITY – ownership lasts as long as
the thing exists. It cannot be extinguished
b y non user but only by adverse
possession.
Limitations: (GSP-OI)
1. General limitations imposed by the State
for its benefit
2. Specific limitations imposed by law
3. Limitations imposed by the party
transmitting the property either by contract
or by will
4. Limitations imposed by the owner himself
5. Inherent limitations arising from conflict
with other rights
DE FACTO CASE OF EMINENT DOMAIN
Expropriation resulting from the actions of nature
as in a case where land becomes part of the sea.
The owner loses his property in favor of the state
without any compensation.
1. Interference necessary to avert an
imminent and threatened danger
2. Damage to another much greater than
damage to property
LEGAL REMEDIES TO RECOVER POSSESSION OF
ONE’S PROPERTY
1. Personal Property:
Replevin – remedy when the complaint prays
for the recovery of the possession of personal
property.
2. Real Property:
ACCION INTERDICTAL
A summary action to recover physical or
material possession only and must be brought
within one year from the time the cause of
action arises.
a. Forcible entry
Action for recovery of material possession
of real property when a person originally in
possession was deprived thereof by force,
intimidation, strategy, threat or stealth.
b. Unlawful Detainer
Action for recovery of possession of any
land or building by landlord, vendor,
vendee, or other person against whom the
possession of the same was unlawfully
withheld after the expiration or termination
of the right to hold possession, by virtue of
any contract.

PRINCIPLE OF SELF–HELP (Art. 429)

The owner or lawful possessor of a thing has the
right to exclude any person from the
enjoyment and disposal of the property by the
use of such force as may be necessary to
San Beda College of Law 35
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Forcible Entry and Unlawful Detainer the owner’s right to the same.
Distinguished

Forcible Entry Unlawful Detainer HIDDEN TREASURE

As to when possession became unlawful (Art. 438, 439)
Possession of the Possession is any hidden or unknown deposit of money, jewelry
defendant is unlawful inceptively lawful but or other precious objects, the lawful ownership
from the beginning as becomes illegal from of which does not appear.
he acquires the time defendant
possession by force, unlawfully withholds GENERAL RULE: It belongs to the owner of the
intimidation, strategy, possession after the land, building or other property on which it is
threat or stealth expiration or found.
termination of his EXCEPTION: The finder is entitled to ! provided:
right thereto.
1. Discovery was made on the property of
As to the necessity of demand another, or of the state or any of its political
No previous demand Demand is subdivisions;
for the defendant to jurisdictional if the 2. The finding was made by chance;
vacate is necessary ground is non–
payment of rentals or 3. The finder is not a co–owner of the
failure to comply with property where it is found;
the lease contract 4. The finder is not a trespasser;
As to necessity of proof of prior physical 5. The finder is not an agent of the
possession landowner;
Plaintiff must prove Plaintiff need not
6. The finder is not married under the
that he was in prior have been in prior
absolute community or the conjugal
physical possession of physical possession
partnership system (otherwise his share
the premises until he
belongs to the community).
was deprived thereof
by the defendant NOTE:
As to when the 1 year period is counted It is necessary that no known owner appears.
from “Hence, that money found in a library, when the
1 year period is 1 year period is books were delivered to the legatees in a
generally counted counted from the testamentary proceeding, could not be considered
from the date of actual date of last demand a treasure because it was shown that the library
entry on the land or last letter of had been used by the testator and that money
demand consisted, in greater part, of this kind in circulation
during the life of the testator” (1 Capistrano 394).
ACCION PUBLICIANA
Ordinary civil proceeding to recover the better
right of possession, except in cases of
ACCESSION (Arts. 440– 475)
forcible entry and unlawful detainer. What The right by virtue of which the owner of a thing
is involved is not possession de facto but becomes the owner of everything that is
possession de jure. produced thereby or which is incorporated or
ACCION REIVINDICATORIA attached thereto, either naturally or artificially
(Art. 440).
Action to recover real property based on
ownership. Here, the object is the Classifications:
recovery of the dominion over the property 1. Accession Discreta – the right pertaining to
as owner. the owner of a thing over everything
Requisites: produced thereby

1. Identity of the Property FRUITS

2. Plaintiff’s title to the property all periodical additions to a principal thing

produced by forces inherent to the thing
itself
SURFACE RIGHTS Requisites:
The owner of parcel of land is the owner of its a. Increase or addition to the original
surface and everything under it. thing
The economic utility which such space or subsoil b. At repeated intervals
offers to the owner of the surface sets the limit of
36 MEMORY AID IN TAXATION LAW
Property

c. By inherent forces. RIGHT OF ACCESSION WITH RESPECT TO

IMMOVABLE PROPERTY
Kinds of Fruits
TABLE OF RIGHTS AND OBLIGATIONS
a. natural fruits – spontaneous products
of the soil and the young and other Where the Landowner is the Improver
products of animals
Landowner and
b. industrial fruits – those produced by Owner of Materials
Builder, Planter, Sower
lands of any kind through cultivation or
labor Good Faith Good Faith
1.Acquire the building, 1.Remove them if there
c. civil fruits – rents of buildings, price of planting or sowing would be no injury to
leases or lands and the amount of after paying indemnity work constructed, or
perpetual or life annuities or other for value of materials without plantings or
similar income (Art. 447). constructions being
GENERAL RULE: To the owner belongs the 2.Right to damages for destroyed (Art. 447).
natural, industrial, and civil fruits. negligence (Art. 456). 2.Receive indemnity
for value.
EXCEPTIONS: If the thing is: (PULA)
Bad Faith Good Faith
a) in possession of a possessor in good Acquire after paying 1.Remove materials
faith; value and paying in any event.
b) subject to a usufruct; indemnity for damages 2.Be indemnified for
(Art. 447), but subject to damages (Art. 447).
c) leased or pledged; or material owner’s right to
d) in possession of an antichretic creditor remove.
2. Accession Continua – the right pertaining to Good Faith Bad Faith
the owner of a thing over everything that is Acquire without paying Lose them without right
incorporated or attached thereto either indemnity (by analogy to indemnity (by
naturally or artificially; by external forces. with Art. 449). analogy with Art. 449)
a. With respect to real property Bad Faith
Same as though both acted in good faith
i. accession industrial (Art. 453).
building, planting or sowing
ii. accession natural
IMPORTANT DOCTRINES/PRINCIPLES
alluvium, avulsion, change of river
course, and formation of islands Article 448:

b. With respect to personal property
i. adjunction or conjunction
ii. commixtion or confusion
iii. specification
Basic Principles: (GONE BAD)
1. He who is in good faith may be held
responsible but will not be penalized.
2. To the owner of a thing belongs the
extension or increase of such thing.
3. Bad faith of one party neutralizes the bad
faith of the other.
4. There should be no unjust enrichment at
the expense of others.
5. Bad faith involves liability for damages.
6. Accessory follows the principal.
7. Accession exists only if the incorporation is
such that separation would either seriously
damage the thing or diminish its value.
• applies only when the builder, planter or sower
believes he has the right to so build, plant or
sow because he thinks he owns the land or
believes himself to have a claim of title (Morales
v. CA, GR No. 126196, January 28, 1998).
• refers to a land whose ownership is claimed by
two or more parties, one of whom has built
some works or sown or planted something. It
has no application to a case where the owner
of the land is the builder, etc. who later loses
ownership of the land by sale or donation
(Pecson v. CA, GR No. 115814, May 26, 1995).
• not applicable where a person constructs a
house on his own land and then sells the land,
not the building (Coleongco v. Regalado, GR No. L-452,
December 29, 1952).
• not applicable to cases which are governed by
other provisions of law such as co–ownership,
usufruct, agency, lease.
NOTE: The landowner may not refuse both to pay
for the building and to sell the land and instead
seek to compel the owner of the building to remove
the building from the land. He is entitled to such
removal ONLY when, after having chosen to sell
San Beda College of Law 37
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the land, the other party fails to pay for said land • Failure to register the acquired alluvial
(Ignacio v. Hilario, GR L-175. April 30, 1946). deposit by acretion for a period of 50
years subjects said accretion to
Should no other arrangement be agreed upon, the
acquisition thru prescription by third
owner of the land does not automatically become
persons (Reynante v. CA, GR No. 95907, April 8,
the owner of the improvement (Filipinas Colleges, Inc. v.
1992).
Timbang, GR No. L-12812, September 29, 1959).
Where a co–ownership is terminated by a partition
• When the deposit is by sea water, it
belongs to the state and forms part of
and it appears that the improvement constructed
public domain.
by the erstwhile co–owner has encroached upon a
portion pertaining to another co–owner which is • A gradual change of bed is also governed
however made in good faith, the provision of Art. by the rules on alluvium (Canas v. Tuason 5
448 would apply to determine the respective right Phil.. 689).
rights of the parties. It is the co–owner whose
ACCRETION
portion is encroached upon who has the option to
sell that portion or buy the improvement (Ignacio v. the process by which a riparian land gradually
IAC, 193 SCRA 17 and Sps. Del Ocampo v. Fernandez-Abesia, and imperceptibly receives addition made
GR No. L-49219, April 15, 1988). by the the water to which the land is
contiguous
The provision on indemnity in Art. 448 may be
applied by analogy considering that the primary NOTES: Ownership of the accretion which the
intent of the law is to avoid a state of forced co– land gradually receives belong to the
ownership especially where the parties in the main riparian owner i.e. owners of the lands
agree that Arts. 448 and 546 are applicable and adjoining the banks of the river
indemnity for the improvements may be paid Reasons for the rule:
although they differ as to the basis of the
indemnity. It is the current market value of the 1. To compensate the owner for losses
improvements which should be made the basis of which they may suffer by erosion.
reimbursement to the builder in good faith (Pecson v. 2. To compensate them for the burdens
CA, GR No. 94033, May 29, 1995). of legal easements, which are imposed
The net result of mutual bad faith between the upon them
owner and the builder entitles the builder to the 3. Because it is the owner of the
rights of a builder in good faith (Tan Queto v. CA, GR contiguous land who can utilize the
No. L-38139, May 16, 1983). increment to the best advantage
A lessee who builds a house (useful improvement) 4. Because this is the only feasible
on the land may remove the same, but cannot solution, since the previous owners
compel the lessor to sell to him the land. He is not can no longer be identified.
considered a possessor in good faith or bad faith
(Southwestern University v. Salvador, L- 48013, May 28, 1979). • Accretion operates ipso jure. However, the
additional area is not covered by a Torrens
title and the riparian owner must register
ACCESSION NATURAL the additional area.

1. ALLUVION OR ALLUVIUM (Art. 457) • In the absence of evidence that the change
in the course of the river was sudden, the
increment which lands abutting rivers presumption is that the change was
gradually receive as a result of the current gradual and was caused by alluvium and
of the waters erosion (Payatas-Estate Improvement Co. v. Tuason,
Concept: It is the gradual deposit of sediment 53 Phil. 55).
by the natural action of a current of fresh 2. AVULSION (Art. 459)
water (not sea water), the original identity
of the deposit being lost. the transfer of a known portion of land from
one tenement to another by the force of
Requisites: the current. The portion of land must be
a) the deposit be gradual and such that it can be identified as coming
imperceptible (increase must be from a definite tenement.
comparatively little) Requisites:
b) that it be made through the effects of a) The segregation and transfer must be
the current of the water caused by the current of a river, creek
c) that the land where accretion takes or torrent;
place is adjacent to the banks of the b) The segregation and transfer must be
river sudden or abrupt; and
c) The portion of land transported must
38 MEMORY AID IN TAXATION LAW
Property

be known or identified. whose lands are occupied by the waters of the

river.
NOTES: The owner must remove (not merely
claim) the transported portion within two years 4. FORMATION OF ISLANDS ( Arts. 463–465)
to retain ownership
Rules on Ownership:
In case of uprooted trees, the owner retains
a. If formed by the sea:
ownership if he makes a claim within 6
months. This does not include trees which 1) within territorial waters – State
remain planted on a known portion of land 2) outside territorial waters – to the first
carried by the force of the waters. In this latter occupant
case, the trees are regarded as accessions of
the land through gradual changes in the b. If formed in lakes, or navigable or floatable
course of adjoining stream (Payatas v. Tuazon, 53 rivers – State
Phil. 55). c. If formed on non–navigable or non–
Art. 460 applies only to uprooted trees. If a floatable rivers:
known portion of land with trees standing 1) if nearer to one margin or bank – to
thereon is carried away by the current to the nearer riparian owner
another land, Art. 459 governs.
2) if equidistant from both banks– to the
Registration under the Torrens system does riparian owners, by halves.
not protect the riparian owner against
diminution of the area of his land through NOTE: There is no accession when islands
gradual changes in the course of adjoining are formed by the branching of a river; the
stream (Payatas v. Tuazon, 53 Phil. 55). owner retains ownership of the isolated piece
of land.
Alluvium and Avulsion Distinguished

Alluvium Avulsion RIGHT OF ACCESSION WITH RESPECT TO

gradual and sudden or abrupt MOVABLE PROPERTY
imperceptible process Basic Principle: Accession exists only if
soil cannot be identifiable and separation is not feasible. Otherwise,
identified verifiable separation may be demanded.
belongs to the owner belongs to the owner Kinds (accession continua as to movables):
of the property to from whose property
1. ADJUNCTION
which it is attached it was detached
merely an attachment detachment followed the union of two things belonging to different
by attachment owners, in such a manner that they cannot
be separated without injury, thereby
3. CHANGE OF COURSE OF RIVERS (Art. 461–462) forming a single object.
Requisites: (NAPA) Requisites:
a) There must be a natural change in the 1. the two things must belong to different
course of the waters of the river; owners
otherwise, the bed may be the subject 2. that they form a single object, or that
of a State grant (Reyes–Puno, p.54). their separation would impair their
b) The change must be abrupt or sudden nature
c) The change must be permanent; the Kinds:
rule does not apply to temporary 1. inclusion or engraftment
overflowing
2. soldadura or soldering
d) There must be abandonment by the
owner of the bed i.e. a decision not to 3. escritura or writing
bring back the river to the old bed. 4. pintura or painting
(Reyes–Puno, p.53).
5. tejido or weaving
NOTES: Once the river bed has been
abandoned, the owners of the invaded land Tests to determine principal:
become owners of the abandoned bed to the 1. the “rule of importance and purpose”
extent as provided by Art. 462. No positive act
2. that of greater value
is needed on their part, as it is subject thereto
ipso jure from the moment the mode of 3. that of greater volume
acquisition becomes evident.
4. that of greater merits
It does not apply to cases where the river
simply dries up because there are no persons
San Beda College of Law 39
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Rules on Who is Entitled: ii) he must indemnify the owner of the

material
a. Adjunction in good faith by either owner:
EXCEPTION: if the material is
GENERAL RULE: accessory follows the
more valuable than the resulting
principal.
thing, the owner of the material
EXCEPTIONS: if the accessory is much has the option:
more precious than the principal, the
1) to acquire the work,
owner of the accessory may demand
indemnifying for the labor, or
the separation even if the principal
suffers some injury 2) to demand indemnity for the
material
b. Adjunction in bad faith by the owner of the
principal b. Owner of the principal (worker) in bad
faith: the owner of the material has the
Option of the owner of the accessory:
option:
i) to recover the value plus damages
i) to acquire the result without indemnity
ii) to demand separation plus damages
ii) to demand indemnity for the material
c. Adjunction in bad faith by the owner of the plus damages
accessory
c. Owner of the material in bad faith
i) he loses the accessory
i) he loses the material
ii) he is liable for damages
ii) he is liable for damages
When separation of things allowed:
a. separation without injury
ADJUNCTION, MIXTURE AND SPECIFICATION
b. accessory is more precious than the DISTINGUISHED
principal
Adjunction Mixture Specification
c. owner of the principal acted in bad
faith Involves at Involves at least 2 May involve one
least 2 things thing (or more)
2. MIXTURE things but form is
Union of materials where the components lose changed
their identity. Accessory Co-ownership Accessory
Kinds: follows the results follows the
principal principal
a. Commixtion – mixture of solids
Things Things mixed or The new object
b. Confusion – mixture of liquids joined confused may retains or
Rules: retain their either retain or preserves the
nature lose their nature of the
a. By the will of both owners or by respective natures original object.
accident: each owner acquires an
interest in proportion to the value of his
material
QUIETING OF TITLE (Arts. 476–481)
b. By one owner in good faith: apply
rule (a) It is an equitable action in rem to determine the
condition of the ownership or the rights to
c. By one owner in bad faith: immovable property, and remove doubts thereon.
i) he loses all his rights to his own Technically, it is quasi in rem, which is an accion in
material personam concerning real property. The result
ii) he is liable for damages is not binding upon the whole world and
therefore, not in rem (Paras, p.297).
3. SPECIFICATION
Requisites: (LCD-R)
It is the transformation of another’s material by
the application of labor. The material 1. Plaintiff must have a legal or equitable title
becomes a thing of different kind. to, or interest in the real property which is
• Labor is the principal. the subject matter of the action;
2. There must be a cloud in such title;
Rules:
3. Such cloud must be due to some
a. Owner of the principal (worker) in good
instrument, record, claim, encumbrance or
faith:
proceeding which is apparently valid but is
i) maker acquires the new thing in truth invalid, ineffective, voidable or
40 MEMORY AID IN TAXATION LAW
Property

unenforceable, and is prejudicial to the The action to quiet title does NOT apply:
plaintiff’s title; and
a) to questions involving interpretation of
4. Plaintiff must return to the defendant all documents
benefits he may have received from the
b) to mere written or oral assertions of claims,
latter, or reimburse him for expenses that
EXCEPT:
may have redounded to his benefit.
i) if made in a legal proceeding
Classes:
ii) if it is being asserted that the
A. Preventive (Action quia timet) = to
instrument or entry in plaintiff’s favor is
prevent a future cloud (doubt) from being
not what it purports to be
cast upon the title to real property or an
interest therein (Art. 476 par. 2).
B. Remedial (Action to quiet title) = the c) to boundary disputes
action may be brought to remove a cloud d) to deeds by strangers to the title UNLESS
or quiet title to real property or an interest purporting to convey the property of the
therein whenever: plaintiff
a. There is a present cloud on the title e) to instruments invalid on their face
that may be prejudicial to the same.
f) where the validity of the instrument
b. A cloud exists by reason of any involves pure questions of law
instrument, record, claim,
encumbrance, proceeding , obligation Ruinous Buildings and Trees in Danger of
that is apparently valid or effective; Falling (Arts. 482–483):
c. But is in truth and in fact, such • As to buildings – the owner is obliged to
instrument is invalid, ineffective, demolish or execute the necessary work to
voidable or unenforceable, prevent the building from falling. If he fails to
extinguished or terminated barred by do so, the authorities shall order its demolition
extinctive prescription (Reyes-Puno. p.62). at the expense of the owner, or take measures
to insure public safety. The complainant must
Prescriptive Period: show that his property is adjacent to the
1. plaintiff in possession – imprescriptible dangerous construction, or must have to pass
by necessity in the immediate vicinity.
2. plaintiff not in possession – 10 (ordinary) or
30 years (extraordinary) • The owner is responsible for damages to
others due to lack of necessary repairs.
Action to Quiet Title and Action to Remove However, if the damage is caused by defects
Cloud or Title Distinguished in the construction, then the builder is
Action to Remove responsible for the damages.
Action to Quiet Title
Cloud
PURPOSE
to put an end to to remove a possible
troublesome litigation foundation for a
in respect to the future hostile claim
property involved
NATURE OF THE ACTION
remedial action Preventive action to
involving a present prevent a future cloud
adverse claim on the title

The right of common dominion which two or more
persons have in a spiritual part of a thing which is
not physically divided.
Concept: co–ownership exists where the
ownership of a thing physically undivided pertains
to more than one person.
! By the nature of co–ownership, a co–
Co–ownership
owner cannot point to any specific portion
of the property owned in common as his
own because his share in it remains
intangible and ideal (Avila et al v. Sps. Barabat,
GR No. 141993, May 17, 2006).
! The possession of a co–owner is like that
of a trustee and shall not be regarded as
adverse to the other co–owner but in fact
beneficial to all of them (Salvador v. CA, 313
San Beda College of Law 41
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Phil. 36). Co–ownership Partnership

Requisites: A co–ownership is not Death or incapacity
dissolved by the death or dissolves the
1. Plurality of owners; incapacity of a co–owner. partnership
2. The Object of ownership must be a thing No public instrument May be made in any
or right which is undivided; needed even if real property form except when real
is the object of the co– property is
3. Each co–owner’s right must be limited ownership contributed
only to his ideal share of the physical
whole. An agreement to keep the There may be
thing undivided for a period agreement as to a
Characteristics: (PLeG-SNC) of more than 10 years is definite term without
void. limit set by law.
a) Plurality of subjects/owners
b) There is a single object which is not
materially divided RULES
c) There is no mutual representation by the Rights of each co–owner as to the thing
co–owners owned in common: (USBRAP–LDP)
d) It exists for the common enjoyment of the a. To use the thing owned in common
co–owners
Limitations:
e) It has no distinct legal personality
i) use according to the purpose for
f) It is governed first of all by the contract of which it was intended
the parties; otherwise, by special legal
provisions, and in default of such ii) interest of the co–ownership must not
provisions, by the provisions of Title III on be prejudiced
co–ownership iii) o t h e r c o – o w n e r s m u s t n o t b e
Sources: (LOST–C2) prevented from using it according to
their own rights
1. Law
b. To share in the benefits and charges in
2. Contract proportion to the interest of each.
3. Chance NOTE: Any stipulation to the contrary is
4. Occupation void.
5. Succession c. To the benefits of prescription: prescription
by one co–owner benefits all.
6. Testamentary disposition or donation inter
vivos d. Repairs and taxes: to compel the others to
share in the expenses of preservation
Co–ownership and Partnership Distinguished even if incurred without prior notice.
Co–ownership Partnership NOTE: The co–owner being compelled
Can be created without the Can be created only may exempt himself from the payment of
formalities of a contract by contract, express taxes and expenses by renouncing his
or implied share equivalent to such taxes and
Has no juridical or legal Has juridical expenses. The value of the property at the
personality personality distinct time of the renunciation will be the basis of
from the partners the portion to be renounced.
Purpose is collective Purpose is to obtain e. Alterations: to oppose alterations made
enjoyment of the thing profits without the consent of all, even if
Co–owner can dispose of A partner, unless beneficial.
his shares without the authorized cannot
Alteration is an act by virtue of which a
consent of the others with dispose of his share
the and substitute co–owner changes the thing from the state
transferee automatically another as a partner in which the others believe it should
becoming a co–owner. in his place. remain, or withdraws it from the use to
which they desire it to be intended.
There is no mutual A partner can
representation. generally bind the f. To protest against seriously prejudicial
partnership. decisions of the majority
Distribution of profits must Distribution of profits g. Legal redemption: to be exercised within
be proportional to the is subject to the 30 days from written notice of sale of an
respective interests of the stipulation of the
undivided share of another co–owner to a
co–owners parties
stranger
42
Property
h. To defend the co–ownership’s interest in
court
i. To demand partition at any time
Partition is the division between 2 or more
persons of real or personal property which
they own in common so that each may
enjoy and possess his sole estate to the
exclusion of and without interference from
others. The purpose of partition is to
separate, divide and assign a thing held in
common among those to whom it belongs.
Their respective shares are therefore
physically determined, clearly identifiable
and no longer ideal (Avila v. Sps. Barabat, GR
No. 141993, March 17, 2006) .
Before a property owned in common is
actually partitioned, all that the co-
owner has is an ideal or abstract
quota or proportionate share in the
entire property (Sps. Coja v. CA, GR No.
151153, December 10, 2007).
GENERAL RULE: Partition is
demandable by any of the co–owners
as a matter of right at any time.
EXCEPTIONS: (U-CLAPS)
1. When there is a stipulation
against it; but not to exceed 10
years.
2. When the condition of indivision is
imposed by the donor or testator;
but not to exceed 20 years.
3. When the legal nature of the
community prevents partition.
4. When partition would render the
thing unserviceable.
5. When partition is prohibited by
law
6. When another co–owner has
possessed the property as
exclusive owner for a period
sufficient to acquire it by
prescription.
The following questions are governed by the
majority of interests:
a. Management
ACTS OF MANAGEMENT (Castan)
i. Those that do not involve an alteration
ii. Are renewable from time to time
iii. Do not bind the community for a long
time in the future
iv. Do not give rise to a real right over the
thing owned in common (Reyes-Puno. p.
73).
v. Expenses to improve or embellish are
decided by the majority
MEMORY AID IN TAXATION LAW
Minority may appeal to the court
against the majority’s decision if the
same is seriously prejudicial.
b. Enjoyment
c. Improvement or embellishment
Rights as to the ideal share of each co–owner:
a. Each has full ownership of his part and of
his share of the fruits and benefits
b. Right to substitute another person its
enjoyment, EXCEPT when personal rights
are involved
c. Right to alienate, dispose or encumber
d. Right to renounce part of his interest to
reimburse necessary expenses incurred
by another co–owner
e. Transactions entered into by each co–
owner only affect his ideal share.
IMPORTANT DOCTRINES/PRINCIPLES:
! When a co–owner executes a deed of
partition and on the strength thereof obtained
a cancellation of title in the name of their
predecessor and the issuance of a new one
wherein he appears as the new owner of the
property , thereby in effect denying or
repudiating co–ownership, the statute of
limitations started to run from such
issuance for the purpose of instituting an
action by the the co–owners for the
declaration of the existence of co–ownership
and of their rights thereunder. The Issuance
of a new title constituted an open and clear
repudiation of the trust or co–ownership and
the lapse of 10 years of adverse possession
was sufficient to vest title to co–owner by
prescription (Delima v. CA, GR No. L-46296
September 24, 1991)
! The act of executing the affidavit of self–
adjudication did not constitute sufficient act of
repudiation. In fact, there was bad faith of the
co–heir in feigning sole ownership of the
property to the exclusion of the other co–
heirs. He cannot profit from it to the detriment
of others. It is a fundamental principle that a
co–owner cannot acquire by prescription the
share of the other co–owners, absent any
clear repudiation of the co–ownership (Galvez v.
CA, et al., GR No. 157954, March 24, 2006).
! The Torrens title does not furnish a shield for
fraud. Thus, where one registered the
property in question in his name in fraud of his
co–heirs, prescription can only be deemed to
have commenced from the time the latter
discovers the fraudulent act (Adille v. CA, GR
No. L-46484 January 29, 1988, Mariategui v. CA, GR
No. 57062, 24 January 1992).
! Under the law, anyone of the co–owners may
bring an action in ejectment. (Art. 487, NCC)
San Beda College of Law
this can be done without joining all other co–
owners because the suit is presumed to have
been filed for the benefit of his co–owners.
But if the suit is for the benefit of the plaintiff
alone who claims to be the sole owner and
entitled to the possession of the litigated
property the action should be dismissed and it
will not prosper especially so that there is
evidence of co–ownership of the property, and
there is no showing that they waived their
rights (Adlawan v. Adlawan, GR No. 161916, January
20, 2006 citing Baloloy v. Hular, GR No. 159723.
September 9, 2004).
EXTINGUISHMENT OF CO–OWNERSHIP
(CALSTEP)
1. Consolidation or merger in one co–owner
2. Acquisitive prescription in favor of a third
person or a co–owner who repudiates the co–
ownership
3. Loss or destruction of property co–owned
4. Sale of property co–owned
5. Termination of period agreed upon by the co–
owners
6. Expropriation
7. judicial or extra–judicial partition
CONDOMINIUM ACT (RA No. 4726)
CONDOMINIUM
an interest in real property consisting of a
separate interest in a unit in a residential,
industrial or commercial building and an
undivided interest in common, directly or
indirectly, in the land on which it is located and
in other common areas of the building.
• Any transfer or conveyance of a unit or an
apartment, office or store or other space
therein, shall include transfer or conveyance
of the undivided interest in the common areas
1. WATERS
Classification
a) Waters public per se (water is the
principal); the bed follows the character of
the water (See Arts. 502 [1] and 502 [2])
b) Waters public or private according to their
bed (water is accessory to bed)
c) Waters public by special provision
2. MINERALS
3. TRADEMARKS / TRADENAMES
43
2008 CENTRALIZED BAR OPERATIONS
or, in a proper case, the membership or
shareholdings in the condominium
corporation: Provided, however, that where
the common areas in the condominium
project are held by the owners of separate
units as co–owners thereof, no condominium
unit therein shall be conveyed or transferred
to persons other than Filipino citizens or
corporations at least 60% of the capital stock
of which belong to Filipino citizens, except in
cases of hereditary succession.
GENERAL RULE: Common areas shall remain
undivided, and there shall be no judicial
partition thereof:
EXCEPTIONS:
1. When the project has not been rebuilt or
repaired substantially to its state prior to its
damage or destruction 3 years after
damage or destruction which rendered a
material part thereof unfit for use;
2. When damage or destruction has
rendered ! or more of the units
untenantable and that the condominium
owners holding more than 30% interest in
the common areas are opposed to
restoration of the projects;
3. When the project has been in existence for
more than 50 years, that it is obsolete and
uneconomic, and the condominium
owners holding in aggregate more than
50% interest in the common areas are
opposed to restoration, remodeling or
modernizing;
4. When the project or a material part thereof
has been condemned or expropriated and
the project is no longer viable, or that the
condominium owners holding in aggregate
more than 70% interest in the common
areas are opposed to the continuation of
the condominium regime;
5. When conditions for partition by sale set
forth in the declaration of restrictions duly
registered have been met.
Some Special Properties
44
Property
Concept: the material holding of a thing or the
enjoyment of a right with the intention to
possess in one’s own right
Requisites:
1. occupancy, apprehension, or taking of a
thing or right (possession in fact);
2. deliberate intention to possess (animus
possidendi) – thus an insane or
demented person cannnot acquire
possession as they are incapable of
understanding the import of their actions;
and
3. by virtue of ones own right – in his own
name or in that of another.
Degrees:
1. p o s s e s s i o n w i t h o u t a n y t i t l e
whatsoever - mere holding without any
right at all ex. thief or squatter;
2. possession with juridical title -
predicated on juridical relation existing
between the possessor and the owner ex.
lessee, usufructuary, depositary, agent,
pledgee and trustee;
3. possession with just title sufficient to
transfer ownership - ex. seller is not the
true owner or could not transmit his right
thereto to a possessor who acted in GF
4. possession with a title in fee simple -
derived from the right of dominion /
possession of an owner; highest degree of
possession
Classes:
a) In one’s own name – where possessor
claims the thing for himself
b) In the name of another – for whom the
thing is held by the possessor
c) In the concept of owner – possessor of
the thing or right , by his actions, is
considered or is believed by other people
as the owner, regardless of the good or
bad faith of the possessor
d) In the concept of holder – possessor
holds it merely to keep or enjoy it, the
ownership pertaining to another person;
possessor acknowledges in another a
superior right which he believes to be
ownership; cannot acquire ownership by
prescription.
NOTE: None of these holders may assert
a claim of ownership for himself over the
thing but they may be considered as
possessors in the concept of owner, or
under claim of ownership, with respect to
the right they respectively exercise over
the thing.
MEMORY AID IN TAXATION LAW
Possession
e) In good faith – possessor is not aware
that there is in his title or mode of
acquisition a defect that invalidates it
Requisites:
1. Ostensible title or mode of
acquisition
2. Vice or defect in the title
3. Possessor is ignorant of the vice
or defect and must have an
honest belief that the thing
belongs to him
NOTE: Gross and inexcusable ignorance
of the law may not be the basis of good
faith, but possible, excusable ignorance
may be such basis (Kasilag v. Roque, GR No.
46623, December 7, 1939).
f) In bad faith – possessor is aware of the
invalidating defect in his own title.
NOTES: Only personal knowledge of the
flaw in one’s title or mode of acquisition
can make him a possessor in bad faith. It
is not transmissible even to an heir.
Possession in good faith ceases from the
moment defects in his title are made
known to the possessor. This interruption
of good faith may take place at the date
of summons or that of the answer if the
date of summons does not appear.
However, there is a contrary view that the
date of summons may be insufficient to
convince the possessor that his title is
defective.
Presumptions in Favor of Possessor:
1. of good faith
2. of continuity of initial good faith
3. of enjoyment in the same character in
which possession was acquired until the
contrary is proved
4. of non–interruption in favor of the present
possessor
5. of continuous possession by the one who
recovers possession of which he was
wrongfully deprived
6. of extension of possession of real property
to all movables contained therein
Object of Possession:
GENERAL RULE: All things and rights
susceptible of being appropriated
EXCEPTIONS:
1. Res communes
2. Property of public dominion
3. Discontinuous servitudes
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4. Non–apparent servitudes Possessor in Possessor

Subject
good faith in bad faith
a. Fruits to possessor to owner
ACQUISITION OF POSSESSION gathered
Manner: b. Cultivation
1. Material occupation of the thing or the Expenses of not reimbursed to reimbursed
gathered possessor to possessor
exercise of a right fruits
2. Subjection to our will prorated according to owner
c. Fruits
3. Proper acts and legal formalities pending and to time
established for acquiring such right charges
(constructive possession) indemnity pro- rata no indemnity
Special Cases of Acquisition of Possession: to possessor
(owner’s option)
Acquisition through another person. Where d. Production
i. in money, or
expenses of
possession is acquired, not by an agent or ii. by allowing full
pending fruits
representative but by a stranger without cultivation and
agency, possession is not acquired until the gathering of all
act is ratified (Art. 532). fruits
reimbursed to reimbursed
Acquisition by Succession Mortis Causa e. Necessary possessor; to possessor;
1. Time of Acquisition. If the inheritance expenses retention no retention
is accepted the estate is
reimbursed to no
transmitted without interruption
possessor reimburse-
from the death of the predecessor. (owner’s option) ment
But the heir who repudiates is i. initial cost
deemed never to have acquired ii. plus value may
possession. f. Useful
remove if no
expenses
reimbursement,
2. Effect of Bad Faith of the decedent.
and no damage
One who succeeds by hereditary is caused to the
title shall not suffer the principal by the
consequences of the wrongful removal
possession of the decedent unless
reimbursement at owner’s
it is shown that he had knowledge owner’s option: option:
of the defects affecting it; but the i. removal if no i. removal, or
effects of possession in good faith g. Ornamental injury, or ii. value at
shall not benefit him except from expenses ii. cost without time of
the death of the decedent (Art. removal recovery
534).
Conflicts between Several Claimants: taxes and charges taxes and
GENERAL RULE: Possession cannot be h. Taxes and i. charged to charges
recognized in two different personalities charges owner i. charged to
except in case of co–possession when there i. on capital ii. charged to owner
is no conflict ii. on fruits possessor ii. charged to
iii. charges iii.prorated owner
Criteria in case of Dispute: iii.to owner
1. present/actual possessor shall be
i. Improve- no reimbursement no
preferred
ments no reimburse-
2. if there are two possessors, the one longer longer ment
in possession existing
3. if the dates of possession are the same, j. Liability for only if acting with liable in
accidental fraudulent intent or every case
the one with a title
loss or negligence, after
4. if all the above are equal, the fact of deterioration summons
possession shall be judicially determined, k. Improve- to owner or lawful to owner or
and in the meantime, the thing shall be ments due to possessor lawful
placed in judicial deposit time or nature possessor

Necessary expenses – made for the preservation

of the thing
46 MEMORY AID IN TAXATION LAW
Property

Useful expenses – add value to property or
increase the object’s productivity
Ornamental expenses – add value to the thing
only for certain persons in view of their
particular whims; neither essential for
preservation nor useful to everybody in
general
EFFECTS OF POSSESSION (Arts. 539–561)
NOTE: A possessor is protected regardless of the
manner of acquisition.
Every possessor is entitled to be respected in his
possession and should he be disturbed therein he
shall be protected in or restored to such
possession by the means established by the laws
of procedure.
The owner must resort to the courts and cannot
forcibly eject a possessor (Bago v. Garcia, 5 Phil. 524).
LOSS OF POSSESSION (Art. 555)
General Causes:
1. By the will of the possessor
a) Abandonment
b) Transfer or conveyance
2. Against the will of the possessor
a) Eminent domain
b) Acquisitive prescription
c) Judicial decree in favor of better right
d) Possession of another for more than
one year
NOTE: This refers to possession de
facto where the possessor loses the
right to a summary action; but he may
still bring action publiciana or
reivindicatoria.
e) By reason of the object
i. destruction or total loss of the
things
ii. withdrawal from commerce
b. Acts merely tolerated either by the possessor
or by his representative or holder in his name
unless authorized or ratified
c. Violence
d. Temporary ignorance of the whereabouts of
movable property
NOTE: The possessor who recovers possession
is considered as having had uninterrupted
possession despite these acts of violence, stealth
and tolerance; but he must recover possession by
due process, and not otherwise (Arts. 561, 536, 539)
(Reyes- Puno, p.114–115).
POSSESSION OF MOVABLES
Possession of movables in good faith is equivalent
to title.
Requisites:
a) possession is in good faith;
b) the owner has voluntarily parted with the
possession of the thing; and
c) possessor is in the concept of owner.
• One who has lost or has been unlawfully
deprived of it, may recover it from
whomsoever possesses it, ordinarily, without
reimbursement.
• If the possessor of a movable lost or of which
the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the
owner cannot obtain its return without
reimbursing the price paid therefor.
Doctrines:
! owner of the thing must prove (1) ownership
of the thing and (2) loss or unlawful
deprivation; or bad faith of the possessor
! Where the owner acts negligently or
voluntarily parts with the thing owned, he
cannot recover it from the possessor
! The owner may recover the movable in case
of loss or involuntary deprivation; but must
reimburse the price paid if possessor acquired
the thing in good faith and at a public sale.

Acts Not Constituting Loss of Possession (Arts. ! WILD animals are possessed only while they
537–538): are under one’s control. DOMESTICATED /
TAMED animals are considered domestic/
a. Acts executed by stealth and without tame if they retain the habit of returning to the
knowledge of the possessor premises of their possessor.

Usufruct
gives a right to enjoy the property of another with Characteristics:
the obligation of preserving its form and
a. Real right
substance, unless the title constituting it or the law
otherwise provides. b. Of temporary duration
c. To derive all advantages from the thing
due to normal exploitation
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d. may be constituted on real or personal c) of cattle (livestock) (Art. 591)

property, consumable or non–consumable,
d) on vineyards and woodlands (Art. 575–576)
tangible or intangible, the ownership of
which is vested in another e) on a right of action (Art. 578)
e. transmissible f) on mortgaged property (Art. 600)
Kinds According to Origin: g) over the entire patrimony (Art. 598)
1. Legal – created by law such as usufruct h) over things which gradually deteriorate
of the parents over the property of their (Art. 573)
unemancipated children
i) of consumable property (Art. 574)
2. Voluntary – created by will of the parties
either by act inter vivos such as donation
or by act mortis causa such as in a last will RIGHTS OF THE USUFRUCTUARY
and testament
As to the thing and its fruits
3. Mixed – acquired by prescription such as
a. To receive and benefit from the fruits
when believing himself to be the owner of
the property of an absentee, gave in his b. To enjoy any increase through accessions
will the usufruct of the property for the and servitudes
requisite prescriptive period to his wife,
c. To the half of the hidden treasure he
who possessed it in good faith as
accidentally finds
usufructuary, and naked ownership to his
brother. d. To lease the thing, generally, for the same
or shorter period as the usufruct.
GENERAL RULE: Usufructuary is bound to
preserve the form and substance of the thing e. To improve the thing without altering its
in usufruct. form and substance
EXCEPTION: Abnormal usufruct whereby the law f. Right to set–off the improvements he may
or the will of the parties may allow the have made on the property against any
modification of the substance of the thing. damage to the same
Usufruct and Lease Distinguished g. To retain the thing until he is reimbursed
for advances for extraordinary expenses
Usufruct Lease and taxes on the capital
Always a real right Generally a h. To collect reimbursements from the owner
personal right for indispensable extraordinary repairs,
Person creating the Lessor may not be taxes on the capital he advanced, and
usufruct should be the the owner damages caused to him.
owner or his duly i. To remove improvements made by him if
authorized agent the same will not injure the property
May be created by law, Generally created As to the usufruct itself
by contract, by will of the by contract
testator, or by e. To mortgage the right of usufruct except
prescription parental usufruct
As a rule, usufruct covers Lease generally f. To alienate the usufruct
all the fruits and all the refers to uses only
uses and benefits of the
entire property. OBLIGATIONS OF THE USUFRUCTUARY
Involves a more or less Lease involves a Before exercising the usufruct:
passive owner who more active owner a. To make an inventory of the property
allows the usufructuary or lessor who
to enjoy the object given makes the lessee b. To give a bond, EXCEPT
in usufruct to enjoy i. when no prejudice would result
Pays for ordinary repairs Lessee is not ii. when the usufruct is reserved by the
and taxes on the fruits generally under donor or parents
obligation to
undertake repairs iii. in cases of caucion juratoria where
or pay taxes the usufructuary, being unable to file
the required bond or security, files a
Special Usufructs verified petition in the proper court
asking for the delivery of the house
a) of pension or income (Art. 570)
and furniture necessary for himself
b) of property owned in common (Art. 582) and his family without any bond or
48
Property
security.
• takes an oath to take care of the things
and restore them
• property cannot be alienated or
encumbered or leased because this
would mean that the usufructuary does
not need it.
NOTE:
Effects of failure to post bond:
a. owner shall have the following options:
i) receivership of realty, sale of
movables, deposit of securities, or
investment of money; OR
ii) retention of the property as
administrator
b. the net product shall be delivered to the
usufructuary
c. usufructuary cannot collect credits due or
make investments of the capital without
the consent of the owner or of the court
until the bond is given.
During the usufruct:
a. To take care of the property
b. To replace with the young thereof animals
that die or are lost in certain cases when
the usufruct is constituted on flock or herd
of livestock
c. To make ordinary repairs
d. To notify the owner of urgent extra–
ordinary repairs
e. To permit works and improvements by the
naked owner not prejudicial to the
usufruct
Encumbrance imposed upon an immovable for the
benefit of a community or one or more persons or
for the benefit of another immovable belonging to
a different owner.
Concept: It is a real right, constituted on the
corporeal immovable property of another, by
virtue of which the owner of the latter has to
refrain from doing or must allow something to
be done on his property, for the benefit of
another person or tenement.
Characteristics:
a) It is a real right but will affect third persons
only when duly registered.
b) It is enjoyed over another immovable,
never on one’s own property.
MEMORY AID IN TAXATION LAW
f. To pay annual taxes and charges on the
fruits
g. To pay interest on taxes on capital paid by
the naked owner
h. To pay debts when the usufruct is
constituted on the whole patrimony
i. To secure the naked owner’s or court’s
approval to collect credits in certain cases
j. To notify the owner of any prejudicial act
committed by third persons
k. To pay for court expenses and costs
regarding usufruct.
At the termination of the usufruct:
a. To return the thing in usufruct to the
owner unless there is a right of retention
b. To pay legal interest on the amount spent
by the owner for extraordinary repairs or
taxes on the capital
c. To indemnify the owner for any losses
due to his negligence or of his transferees
EXTINGUISHMENT OF USUFRUCT: (PT2DERM)
1. Prescription
2. Termination of right of the person constituting
the usufruct
3. Total loss of the thing
4. Death of the usufructuary, unless contrary
intention appears
5. Expiration of the period or fulfillment of the
resolutory condition
6. Renunciation of the usufructuary
7. Merger of the usufruct and ownership in the
same person
Easement or Servitude
c) It involves two neighboring estates (in
case of real easements).
d) It is inseparable from the estate to which it
is attached, and, therefore, cannot be
alienated independently of the estate.
e) It is indivisible for it is not affected by the
division of the estate between two or more
persons.
f) It is a right limited by the needs of the
dominant owner or estate, without
possession.
g) It cannot consist in the doing of an act
unless the act is accessory in relation to a
real easement.
h) It is a limitation on the servient owner’s
rights of ownership for the benefit of the
dominant owner; and, therefore, it is not
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presumed. Modes of Acquisition: (PDFAT)

Classification: 1. by prescription of 10 years (continuous
and apparent easements)
1. As to its exercise:
NOTE:
a) Continuous Easements – those the use of
which is, or may be, incessant without the a. Positive servitude = counted from
intervention of any act of man the day their exercise commences.
b) Discontinuous Easements – those which b. Negative servitude = counted from
are used at intervals and depend upon the formal prohibition to the servient
the acts of man owner to do any act opposed to the
servitude (Art. 621) There must be a
2. As to the indication of their existence:
notarized document.
a) Apparent Easements – those which are
2. by deed of recognition
made known and are continually kept in
view by external signs that reveal the use 3. by final judgment
and enjoyment of the same
4. by apparent sign established by the owner
b) Non–apparent Easements – those which of two adjoining estates, unless a) there
show no external indication of their are contrary stipulations or b) the sign is
existence effaced
3. As to duty of servient owner 5. by title (essential to continuous non–
apparent and discontinuous servitude)
a) Positive – the servient owner must allow
something to be done in his property or
do it himself. These are called
DOMINANT OWNER
“servitudes of intrusion and or/service”
Rights:
b) Negative – the servient owner must
refrain from doing something which he 1. To exercise all the rights necessary for the
could lawfully do if the easement did not use of the easement
exist 2. To make on the servient estate all the
Easement and Lease Distinguished works necessary for the use and
preservation of the servitude
Easement Lease
3. To renounce the easement if he desires to
Real right, whether Real right only when it is exempt himself from contribution to
registered or not registered, or when its necessary expenses
subject matter is real
property and the duration 4. To ask for mandatory injunction to prevent
exceeds one year impairment of his use of the easement
Imposed only on May involve either real or Obligations:
real property personal 1. Cannot render the easement or render it
There is a limited Limited right to both the more burdensome
right to the use of possession and use of 2. Notify the servient owner of works
real property of another’s property necessary for the use and preservation of
another but without the servitude
the right of
possession 3. Choose the most convenient time and
manner in making the necessary works as
Easement and Usufruct Distinguished to cause the least inconvenience to the
servient owner
Easement Usufruct
4. Contribute to the necessary expenses if
Imposed only on May involve either real there are several dominant estates
real property or personal property
Limited to particular Includes all the uses
or specific use of and the fruits of the SERVIENT OWNER
the servient estate property Rights:
A non–possessory Involves a right of 1. To retain ownership and possession of the
right over an possession in an servient estate
immovable immovable or movable
2. To make use of the easement, unless
Not extinguished by Extinguished by the there is agreement to the contrary
the death of the death of the
dominant owner usufructuary 3. To change the place or manner of the
50
Property
easement, provided it be equally
convenient
Obligations:
1. Cannot impair the use of the easement
2. Contribute to the necessary expenses in
case he uses the easement, unless there
is an agreement to the contrary
EXTINGUISHMENT OF EASEMENTS
(REMAIN BREW)
1. Redemption agreed upon
2. Expiration of the term or fulfillment of the
resolutory condition
3. Merger of ownership of the dominant and
servient estate
4. Annulment of the title to the servitude
5. Permanent impossibility to use the easement
6. Non–user for 10 years
a. discontinuous: counted from the day they
ceased to be used
b. continuous: counted from the day an act
adverse to the exercise takes place
7. Bad condition – when either or both estates
fall into such a condition that the easement
could not be used
8. Resolution of the right to create the servitude,
(i.e. in case of pacto de retro, when the
property is redeemed)
9. Expropriation of the servient estate
10. Waiver by the dominant owner
LEGAL EASEMENTS (Arts. 634–687)
EASEMENT RELATING TO WATERS (Art. 637)
NOTE: Lower estates must receive waters which
are naturally and without intervention of man
descend from higher estates including earth
or stones carried with them (Art. 637).
Limitations:
a. Dominant owner must not increase the
burden but he may erect works to avoid
erosion.
b. The servient owner must not impede the
descent of water (but may regulate it).
EASEMENT ON RIPARIAN PROPERTY (Art. 638)
EASEMENT ON DAM OR WEIR (Art. 639)
MEMORY AID IN TAXATION LAW
EASEMENT FOR WATERING CATTLE (Art. 640)
NOTE: This is a combined easement for drawing
of water and right of way
Requisites:
1. must be imposed for reasons of public use
2. must be in favor of a town or village
3. indemnity must be paid
EASEMENT OF AQUEDUCT (Arts. 643–646)
NOTE: From a forced easement, by virtue of
which the owner of an estate who desires to
avail himself of water for the use of said
estate may make such waters pass through
the intermediate estate with the obligation of
indemnifying the owner of the same and also
the owner of the estate to which the water
may filter or flow.
Character: apparent and continuous
Requisites:
1. dominant owner must prove that he has the
capacity to dispose of the water;
2. that the water is sufficient for the intended
use;
3. that the course is most convenient, and least
onerous to the 3rd person; and
4. payment of indemnity.
EASEMENT OF RIGHT OF WAY (Arts. 649–657)
NOTE: The right granted to the owner of an estate
which is surrounded by other estates
belonging to other persons and without an
adequate outlet to a public highway to
demand that he be allowed a passageway
throughout such neighboring estates after
payment of proper indemnity
Requisites:
1. Claimant must be an owner of enclosed
immovable or one with real right;
2. There must be no adequate outlet to a
public highway;
3. Right of way must be absolutely
necessary;
4. Isolation must not be due to the claimant’s
own act;
5. Easement must be established at the point
least prejudicial to the servient estate; and
6. Payment of proper indemnity.
! It is the needs of the dominant property which
ultimately determine the width of the passage,
and these needs may vary from time to time
(Encarnacion v. CA, GR No. 76322 March 11, 1991).
San Beda College of Law 51
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Special Cause of Extinction: 2. by contrary proof:

i) the opening of a public road, or 3. by signs contrary to the existence of the
servitude (Arts. 660 & 661)
ii) joining the dominant tenement to another
with exit on a public road NOTE: If the signs are contradictory, they
cancel each other
NOTE: The extinction is NOT automatic. There
must be a demand for extinction coupled with Rights of Part Owners:
tender of indemnity by the servient owner.
1. to make use of the wall in proportion to
The right of way for cattle should not be more their respective interests, resting buildings
than 10 meters wide unless a greater width was a on it or inserting beams up to one–half of
vested right under laws prior to the Civil Code of the wall’s thickness
1889 (Art. 657).
2. to increase the height of the wall
Easement of right of way cannot be acquired by
a. at his expense
prescription because it is discontinuous/
intermittent (Ronquillo, et al. v. Roco, GR No. L-10619, b. upon payment of proper indemnity
February 28, 1958). c. to acquire half interest in any increase
of thickness or height, paying a
proportionate share in the cost of the
EASEMENT OF PARTY WALL (Arts. 658–666) work and of the land covered by the
Party Wall increase
a common wall which separates 2 estates built by Obligations of Each Part–Owners:
common agreement at the dividing line such 1. to contribute proportionately to the repair
that it occupies a portion of both estates on and maintenance unless he renounces his
equal parts part–ownership
Party Wall and Co–ownership Distinguished 2. if one part owner raises the height of the
wall, he must:
Party Wall Co–ownership
Shares of parties Shares of the co–owners a. bear the cost of maintenance of the
cannot be can be divided and additions
physically separated physically but b. bear the increased expenses of
segregated but they before such division, a preservation
can be physically co–owner cannot point
c. bear the cost of construction
identified to any definite portion of
the property as d. give additional land, if necessary, to
belonging to him thicken the wall
No limitation as to None of the co–owners
use of the party may use the community
EASEMENT OF LIGHT AND VIEW (Arts. 667–673)
wall for exclusive property for his exclusive
benefit of a party benefit 1. Easement of Light (jus luminum) – right
Owner may free Partial renunciation is to admit light from the neighboring estate
himself from allowed by virtue of the opening of a window or the
contributing to the making of certain openings.
cost of repairs and Requisites:
construction of a
a. opening must not be greater than 30
party wall by
centimeters squared, made on the
renouncing all his
ceiling or on the wall; and
rights thereto
b. there must be an iron grating
Presumptions of Existence (juris tantum):
2. Easement of view (jus prospectus) – the
1. in adjoining walls of buildings, up to right to make openings or windows, to
common elevation enjoy the view through the estate of
2. in dividing walls of gardens and yards another and the power to prevent all
(urban) constructions or work which would
obstruct such view or make the same
3. in dividing fences, walls and live hedges of difficult. It necessarily includes easement
rural tenements of light
4. in ditches or drains between tenements
Rebuttal of Presumption:
1. title
52 MEMORY AID IN TAXATION LAW
Property

Restrictions on openings in one’s own wall the opening of the window, if it is

when contiguous (less than 2m) to another’s through a party wall
tenement:
b. negative – counted from the formal
1. it cannot exceed 1 foot sq. (30cm each prohibition on the servient owner.
side)
2. openings must be at the height of the
NOTE: Mere non–observance of distances
joists, near the ceiling (Choco v. Santamaria, 21
prescribed by Art. 670 without formal prohibition,
Phil. 132)
does not give rise to prescription
3. the abutting owner may:
There exists a doubt as to whether easements
a. close the openings if the wall against nuisance (Art. 682) and lateral and
becomes a party wall subjacent support may be categorized as legal
easements (Reyes- Puno. pp.188–189).
b. block the light by building or erecting
his own wall unless a servitude is
acquired by title or prescription
VOLUNTARY EASEMENTS
c. ask for the reduction of the opening to
the proper size
(Arts. 688–693)
Restrictions as to views: Constituted by the will of the parties or of a
testator.
1. Direct views: the distance of 2 METERS
between the wall and the boundary must The owner possessing capacity to encumber
be observed property may constitute voluntary servitude. If
there are various owners, ALL must consent; but
2. Oblique views: (walls perpendicular or at consent once given is not revocable.
an angle to the boundary line) must not be
less than 60cm from the boundary line to Voluntary easements are established in favor of:
the nearest edge of the window 1. predial servitudes:
NOTE: Any stipulation permitting lesser a. for the owner of the dominant estate
distances is void (Art. 673).
b. for any other person having any juridical
Modes of Acquisition relation with the dominant estate, if the
owner ratifies it.
1. by title
2. personal servitudes: for anyone capacitated to
2. by prescription
accept.
a. positive – counted from the time of

Nuisance
Any act, omission, establishment, business or 4. Private – affects only a person or a small
condition of property or anything else which: number of persons.
(ISAHO)
1. Injures/endangers the health or safety of
others; DOCTRINE OF ATTRACTIVE NUISANCE

2. Shocks, defies or disregards decency or One who maintains on his premises dangerous
morality; instrumentalities of a character likely to attract
children in play and who fails to exercise ordinary
3. Annoys or offends the senses; care to prevent children from playing therewith or
4. Hinders or impairs the use of property; or resorting thereto is liable to a child of tender years
who is injured thereby, even if the child is
5. Obstructs or interferes with the free technically a trespasser in the premises.
passage to any public highway or street,
or body of water.
Classes: Remedies against Public Nuisance: (PCE)

1. Per se – nuisance at all times and under 1. Prosecution under the RPC or local
all circumstances regardless of location ordinance
and surrounding. 2. Civil Action
2. Per accidens – nuisance by reason of 3. Extrajudicial Abatement
circumstances, location, or surroundings.
Remedies against Private Nuisance: (CE)
3. Public – affects the community or a
considerable number of persons. 1. Civil Action
San Beda College of Law 53
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2. Extrajudicial Abatement TITLE

NOTE: The action to abate a public/private the juridical justification for the acquisition or a
nuisance is not extinguished by prescription. transfer of ownership or other real right. This
is the remote cause of the acquisition.

EXTRAJUDICIAL ABATEMENT
DIFFERENT MODES (AND TITLES) OF ACQUIRING
Requisites:
OWNERSHIP
1. nuisance must be specially injurious to the
person affected; Modes of acquiring Titles of acquiring
ownership ownership
2. no breach of peace or unnecessary injury
must be committed; A. Original Modes
3. prior demand; Occupation Condition of being
without known owner
4. prior demand has been rejected;
Work which includes Creation, discovery or
5. approval by district health officer and Intellectual creation invention
assistance of local police; and
B. Derivative Modes
6. value of destruction does not exceed P3,000.
Law Existence of required
THEORY OF MODE AND TITLE conditions
MODE Tradition Contract of the parties
the specific cause which gives rise to them, as the Donation Contract of the parties
result of the presence of a special condition of Prescription Possession in the
things, of the aptitude and intent of persons, concept of owner
and of compliance with the conditions
established by law. This is the proximate Succession Death
cause of the acquisition.

Occupation
a mode of acquiring ownership by the seizure of conditions
things corporeal which have no owner, with the
6. catching of domesticated animals that
intention of acquiring them, and according the
have escaped from their owners, under
rules laid down by law.
certain conditions
7. catching of pigeons without fraud or
Requisites: artifice
1. There must be seizure of a thing; 8. transfer of fish to another breeding place
without fraud or artifice
2. The thing seized must be corporeal
personal property; Important Doctrines/Principles:
3. The thing must be susceptible of ! A thing that has been lost or taken by
appropriation by nature; force is not ipso facto converted to res
nullius for it to belong to the person who
4. The thing must be without an owner;
takes possession of the same without the
5. There must be an intention to appropriate; necessity of proving the mode of his
and acquisition and it may thus be recovered
6. Requisites laid down by law must be by the original owner (See Art. 559). Such
complied with. thing cannot be acquired by prescription
even if extraordinary.
Specific Instances:
! Land cannot be the object of occupation
1. hunting and fishing because when land is without an owner, it
2. finding of movables which do not have an pertains to the State (Report of Code
owner Commission).
3. finding of abandoned movables
4. finding of hidden treasure TRADITION/DELIVERY
5. catching of swarm of bees that has a mode of acquiring ownership as a consequence
escaped from its owner, under certain of certain contracts, by virtue of which, the
54 MEMORY AID IN TAXATION LAW
Property

object is placed in the control and possession when the vendor continues in
of the transferee, actually or constructively. possession of the thing sold not as
owner but in some other capacity
Kinds:
3. Quasi–tradition – exercise of the right of
1. Real Tradition – actual delivery
the grantee with the consent of the grantor
2. Constructive Tradition
4. Tradicion por ministerio de la ley –
a. traditio symbolica – parties make use delivery by operation of law
of a token or symbol to represent the
5. Tradition by public instrument
thing delivered
Requisites:
b. traditio longa manu – by mere
consent of the parties if the thing sold 1. Right transmitted should have previously
cannot be transferred to the existed in the patrimony of the grantor;
possession of the vendee at the time
2. Transmission should be by just title;
of the sale
3. Grantor and grantee should have intention
c. traditio brevi manu – when the vendee
and capacity to transmit and acquire; and
already has possession of the thing
sold by virtue of another title 4. Transmission should be manifested by
some act which should be physical,
d. traditio constitutum possessorium –
symbolical or legal.

Donation
an act of liberality whereby a person disposes 3. As to consideration:
gratuitously of a thing or right in favor of another
a. simple – gratuitous
who accepts it (Art. 725)
b. remuneratory or compensatory –
made on account of donee’s merits
Requisites: (CIDA) c. modal – imposes upon the donee a
1. Donor must have capacity to make the burden which is less than the value of
donation the thing donated
2. He must have donative intent (animus Donation Inter Vivos and Donation Mortis
donandi) Causa Distinguished
3. There must be delivery Donation Inter Vivos Donation Mortis Causa
4. Donee must accept or consent to the Takes effect Takes effect upon the
donation independently of the death of the donor
donor’s death
Essential Features/Elements of a True
Donation: Made out of donor’s Made in contemplation of
pure generosity his death without the
a) Alienation of property by the donor during intention to lose the thing
his lifetime, which is accepted or its free disposal in
case of survival
b) Irrevocability by the donor
Title conveyed to the Title conveyed upon
c) Animus Donandi donee before the donor’s death
d) Consequent impoverishment of the donor donor’s death
(diminution of his assets) Valid if donor survives Void if donor survives
donee donee
Classification:
Generally irrevocable Always revocable at
1. As to effectivity: during donor’s lifetime anytime and for any
except for grounds reason before the donor’s
a. inter vivos
provided by law (Arts. death
b. mortis causa 760, 765)

c. propter nuptias Must comply with the Must comply with the
formalities required by formalities required by
2. As to perfection/extinguishment: Arts. 748 and 749 of the law for the execution of
Code wills
a. pure
Must be accepted by Can only be accepted
b. with a condition the donee during his after the donor’s death
c. with a term lifetime
Subject to donor’s tax Subject to estate tax
San Beda College of Law
Donations Prohibited by Law:
1. Made by persons guilty of adultery or
concubinage at the time of donation;
2. Made between persons found guilty of the
same criminal offense in consideration
thereof;
3. Made to a public officer or his/her spouse,
descendants or ascendants in
consideration of his/her office;
4. Made to the priest who heard the
confession of the donor during the latter’s
last illness, or the minister of the gospel
who extended spiritual aid to him during
the same period;
5. Made to relatives of such priest, etc. within
the 4th degree, or to the church to which
such priest belongs;
6. Made by a ward to the guardian before the
approval of accounts;
7. Made to an attesting witness to the
execution of donation, if there is any, or to
the spouse, parents, or children, or
anyone claiming under them.
8. Made to a physician, surgeon, nurse,
health officer or druggist who took care of
the donor during his/her last illness;
9. Made by individuals, associations or
corporations not permitted by law to make
donations; and
10. Made by spouses to each other during the
marriage or to persons of whom the other
spouse is a presumptive heir.
Forms of Donations:
1. Donations of movable property:
a. With simultaneous delivery of property
donated:
i. it may be oral/written – P5,000 or
less;
ii. if value exceeds P5,000 – written
in public or private document
b. Without simultaneous delivery:
The donation and acceptance must
be written in a public or private
instrument, regardless of value.
2. Donation of immovable property:
a. must be in a public instrument
specifying the property donated and
the burdens assumed by donee,
regardless of value
b. acceptance must be either:
i. in the same instrument; or
ii. in another public instrument,
notified to the donor in authentic
form, and noted in both deeds
55
2008 CENTRALIZED BAR OPERATIONS
NOTE: Expression of gratitude to the donor
without express acceptance was held a
sufficient acceptance (Cuevas v. Cuevas, GR No.
L-8327,!December 14, 1955)
Limitations on Donation of Property
1. Future property cannot be donated.
2. Present property that can be donated:
a. if the donor has forced heirs: he
cannot give or receive by donation
more than what he can give or receive
by will
b. if the donor has no forced heirs:
donation may include all present
property provided he reserves in full
ownership or in usufruct:
i. the amount necessary to support
him and those relatives entitled to
support from him
ii. property sufficient to pay the
donor’s debt contracted prior to
the donation.
3. Donation should not prejudice creditors
4. Donee must reserve sufficient means for
his support and for his relatives which are
entitled to be supported by him.
Effects of Donation
1. donee may demand the delivery of the
thing donated
2. donee is subrogated to the rights of the
donor in the property
3. in donations propter nuptias, the donor
must release the property from
encumbrances, except servitudes
4. donor’s warranty exists if
a. expressed
b. donation is propter nuptias
c. donation is onerous
d. donor is in bad faith
5. when the donation is made to several
donees jointly, they are entitled to equal
portions, without accretion, unless the
contrary is stipulated
Payment of the Donor’s Debt by the Donee
1. If there is express stipulation: the donee
is to pay only debts contracted before the
donation, if not otherwise specified; but the
donee answers only up to the value of the
property donated, if no stipulation is made
to the contrary
2. If there is no stipulation: the donee is
answerable for the debts of the donor only
in case of fraud against creditors.
56 MEMORY AID IN TAXATION LAW
Property

Acts of Ingratitude (Art. 765) turpitude, even though he should prove it,
unless the crime or the act has been
1. If the donee should commit some offense
committed against the donee himself, his
against the person, the honor or property
wife or children under his authority; and
of the donor, or of his wife or children
under his parental authority; 3. He unduly refuses him support when the
donee is legally or morally bound to give
2. He imputes to the donor any criminal
support to the donor.
offense, or any act involving moral

Prescription
Kinds: Acquisitive Extinctive
1. Acquisitive prescription – one acquires prescription prescription
ownership and other real rights through results in the results in the loss of a
the lapse of time in the manner and under acquisition of real or personal right,
the conditions laid down by law. ownership or other or bars the cause of
a. Ordinary acquisitive prescription: real rights in a person action to enforce said
requires possession of things in good as well as the loss of right
faith and with just title for the time said ownership or real
fixed by law rights in another
b. Extraordinary acquisitive prescription: can be proven under should be affirmatively
acquisition of ownership and other the general issue pleaded and proved to
real rights without need of title or of without its being bar the action or claim
good faith or any other condition affirmatively pleaded of the adverse party

Requisites: Period of Prescription

a. capacity to acquire by prescription Movables Immovables
b. a thing capable of acquisition by Good Faith
prescription
4 years 10 years
c. possession of thing under certain
Bad Faith
conditions
8 years 30 years
d. lapse of time provided by law
2. Extinctive Prescription – rights and Rules on Computation of Period:
actions are lost through the lapse of time 1. The present possessor may complete the
in the manner and under the conditions period necessary for prescription by
laid down by law. tacking his possession to that of his
Acquisitive and Extinctive Prescription grantor or predecessor.
Distinguished 2. It is presumed that the present possessor
who was also the possessor at a previous
Acquisitive Extinctive
time, has continued to be in possession
prescription prescription
during the intervening time, unless there is
relationship between one does not look to proof to the contrary.
the occupant and the the act of the possessor
land in terms of but to the neglect of the 3. The first day shall be excluded and the last
possession is capable owner day included.
of producing legal
consequences; it is the Persons Against Whom Prescription Runs:
possessor who is the 1. Minors and other incapacitated persons
actor who have parents, guardians or other legal
requires possession by requires inaction of the representatives
a claimant who is not owner or neglect of one
2. Absentees who have administrators
the owner with a right to bring his
action 3. Persons living abroad who have managers
applicable to applies to all kinds of or administrators
ownership and other rights, whether real or 4. Juridical persons, except the state and its
real rights personal
subdivision
vests ownership or produces the extinction
other real rights in the of rights or bars a right Persons Against Whom Prescription Does
occupant of action NOT run:
1. Between husband and wife, even though
San Beda College of Law 57
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there be separation of property agreed minority or insanity of the latter

upon in the marriage settlements or by
3. Between guardian and ward during the
judicial decree.
continuance of the guardianship
2. Between parents and children, during the

! END OF PROPERTY "

58 MEMORY AID IN CIVIL LAW
Wills & Succession

CIVIL LAW
WILLS AND SUCCESSION
WILL AND SUCCESSION
SUCCESSION c. Legal/Intestate – those who succeed
to the estate of the decedent who
A mode of acquisition by virtue of which the
dies without a valid will, or the portion
property, rights and obligations to the extent of
of such estate not disposed of by will
the value of the inheritance, of a person are
transmitted through his death to another or DEVISEES OR LEGATEES – persons to
others either by his will or by operation of law whom gifts of real or personal property
(Art. 774). are respectively given by virtue of a will
Kinds (Art. 778 – 780): The successors must
1. Testamentary or Testacy – by will a. survive the decedent
2. Legal or intestacy – by operation of law b. willing to accept the inheritance
based on the decedent’s presumed will
c. capacitated to inherit
3. Mixed – partly testamentary and partly
NOTE: The distinction between heirs and
legal
legatees are significant in these cases:
Elements:
a. preterition
1. Subjective Element (Art. 775)
b. imperfect disinheritance
A. Decedent – person whose property is c. after– acquired properties
transmitted through succession
d. acceptance or non–repudiation of
B. Successors successional rights
HEIRS – those who are called to the whole 2. Causal Element (Art. 777)
or to an aliquot portion of the inheritance
either by will or by operation of law DEATH OF THE DECEDENT

a. Voluntary – those instituted by the However, a person may be “presumed” dead

testator in his will, to succeed to the for the purpose of opening his succession (see
inheritance or the portion thereof of rules on presumptive death Art. 390 and 391). In this
which the testator can freely dispose case, succession is only of provisional
character because there is always the chance
b. Compulsory/Forced – those who that the absentee may still be alive.
succeed by force of law to some
portion of inheritance in an amount
predetermined by law known as
legitime

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
San Beda College of Law 59
2008 CENTRALIZED BAR OPERATIONS

3. Objective Element part of inheritance as they are not

INHERITANCE extinguished by death.

Succession and Inheritance Distinguished c) Rights of obligations are by nature

transmissible and may constitute
SUCCESSION INHERITANCE part of inheritance both with
respect to the rights of the creditor
Refers to the Refers to the
and as regards to the obligations
legal mode by universality or
of the debtor.
which inheritance entirety of the
is transmitted to property, rights and 2. A L L W H I C H H AV E A C C R U E D
the persons obligations of a THERETO SINCE THE OPENING OF
entitled to it person who died SUCCESSION (Art. 781)

Inheritance includes: After–Acquired Property (Art. 793)

1. P R O P E R T Y, R I G H T S A N D GENERAL RULE: Property acquired during

O B L I G AT I O N S NOT the period between the execution of the
EXTINGUISHED BY DEATH (Art. will and the death of the testator is NOT
776) included among the property disposed of.

General rules on rights and EXCEPTION: When a contrary intention

obligations extinguished by his expressly appears in the will
death • This rule applies only to legacies and
a) Rights which are purely personal devises and not to institution of heirs.
are by their nature and purpose
intransmissible for they are
extinguished by death
b) Rights which are patrimonial or
relating to property are generally

Testamentary Succession
Testamentary Succession
Concept
WILL b. determination of the portions which
they are to take, when referred to by
an act whereby a person is permitted, with the
name; and
formalities prescribed by law, to control to a
certain degree the disposition of his estate to c. determination of whether or not the
take effect after his death (Art. 783) testamentary disposition is to be
operative.
Kinds of Wills:
Acts which MAY be entrusted to a third
1. Notarial or ordinary
person (Art. 786):
2. Holographic
a. distribution of specific property or
Characteristics of a Will: sums of money that he may leave in
1. UNILATERAL – does not need the approval of general to specified classes or causes
any other person. b. designation of the persons, institutions
2. STRICTLY PERSONAL ACT – the disposition or establishments to which such
of property is solely dependent upon the property or sums are to be given or
testator. applied.

Acts which MAY NOT be left to the
discretion of a third person (Arts. 785, 787):
a. duration or efficacy of the designation
of heirs, devisees or legatees;
3. FREE AND VOLUNTARY ACT – any vice
affecting the testamentary freedom can cause
the disallowance of the will.
60
Wills & Succession
5. FORMAL AND SOLEMN ACT – the
formalities are essential for the validity of the
will.
6. ACT MORTIS CAUSA – takes effect only
after the death of the testator
7. AMBULATORY AND REVOCABLE DURING
THE TESTATOR’S LIFETIME
8. INDIVIDUAL ACT – Two or more persons
cannot make a single joint will, either for their
Interpretation of Wills (Arts. 788–792)
All rules of construction are designed to ascertain
and give effect to that intention. It is only when the
intention of the testator is contrary to law, morals,
or public policy that it cannot be given effect.
In case of doubt, that interpretation by which the
disposition is to be operative or will sustain and
uphold the will in all its parts shall be adopted,
provided that it can be done consistently with
the established rules of law.
Reason: testate succession is preferred to
intestacy.
Kinds of Ambiguities (Art. 789):
1. Latent or Intrinsic Ambiguities – those
which do not appear on the face of the will
and is discovered only by extrinsic
evidence.
The ability as well as the power to make a will
• must be present at the time of the EXECUTION
of the will
Requisites:
1. At least 18 years of age; and
2. Of sound mind (Art. 799)
It is not necessary that the testator be in
full possession of all his reasoning
faculties, or that his mind be wholly
unbroken, unimpaired, or unshattered by
disease, injury or other cause. It shall be
sufficient if he knows: (NOA)
a. the nature of the estate to be
disposed of
b. the proper objects of his bounty
c. the character of the testamentary
act
The law presumes that the testator is of
sound mind unless: (PI–G)
MEMORY AID IN CIVIL LAW
reciprocal benefit or for another person.
However, separate or individually executed
wills, although containing reciprocal
provisions (mutual wills), are not prohibited,
subject to the rule on disposicion captatoria.
2. Patent or Extrinsic Ambiguities – those
which appear on the face of the will itself.
• There is no distinction between patent and
latent ambiguities, in so far as the
admissibility of parol or extrinsic evidence
to aid testamentary disposition is
concerned.
GENERAL RULE: Intrinsic or extrinsic evidence
may be used to ascertain the intention of the
testator.
EXCEPTION: the oral declarations of the testator
as to his intentions must be excluded
• The validity of a will as to its form depends
upon the observance of the law in force at the
time it is made (Art. 795).
Testamentary Capacity
a. when the testator , one month or
less, before making his will, was
publicly known to be insane or
b. was under guardianship at the
time of making his will (Torres and
Lopez de Bueno v. Lopez, GR No. 24569,
February 26, 1926).
NOTE: In both cases, the burden of
proving sanity is cast upon proponents of
the will.
Effect of Certain Infirmities:
1. mere senility or infirmity of old age does not
necessarily imply that a person lacks
testamentary capacity
2. physical infirmity or disease is not inconsistent
with testamentary capacity
3. persons suffering from idiocy (those
congenitally deficient in intellect), imbecility
(those who are mentally deficient as a result
of disease), and senile dementia (peculiar
decay of the mental faculties whereby the
person afflicted is reduced to second
childhood) do not possess the necessary
mental capacity to make a will
San Beda College of Law
4. an insane delusion which will render one
incapable of making a will may be defined as
a belief in things which do not exist, and
which no rational mind would believe to exist;
if the insane delusion touches the subject
matter of the will, testamentary disposition is
void
5. a deaf–mute and blind person can make a will
(i.e. Art. 807-808)
EXTRINSIC VALIDITY
The validity of a will as to its form depends upon
the observance of law in force at the time it is
made (Art. 795).
Common Formalities
1. Every will must be in writing; and
2. Executed in a language or dialect known to
the testator (Art. 804).
Special Formalities
NOTARIAL OR ORDINARY WILL (Art. 805)
A.
SUBSCRIPTION
The manual act by the testator and his
instrumental witnesses of affixing their
signature to the instrument.
Purposes:
1. identify the testator
2. authenticate the document
How Subscribed:
1. By the signature of the testator
Manner of Signing: The use of initials,
first name, assumed name or any
signature, marks or design intended by the
testator to authenticate renders the will
sufficiently signed by him.
A complete signature is not essential to
the validity of a will, provided the part
of the name written was affixed to the
instrument with intent to execute it as
a will.
Signature by Mark: Sufficient even if at
the time of placing it, the testator knew
how to write and is able to do so.
2. Subscription by third person
• it should be stated in the attestation
clause
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6. an intoxicated person or person under the
influence of drugs may make a will for there is
no complete loss of understanding unless
where the testator has used intoxicating liquor
or drugs excessively to such an extent as to
impair his mind, so that at the time the will is
executed, he does not know the extent and
value of his property, or the names of persons
who are the natural objects of his bounty
Formalities of Wills
• it is the testator’s name that must
have been written by the 3rd person
• it must have been written in the
testator’s presence and under his
express direction.
Place of Signature:
end of the will otherwise void
NOTE: Should take place in the presence of the
instrumental witnesses.
B.
ATTESTATION
The act of 3 or more credible witnesses of
witnessing the execution of the will in the
presence of the testator and of one another;
Purpose: in order to see and take note mentally
that such will has been executed in
accordance with requirements prescribed by
law.
NOTE: If the required numbers of attesting
witness are competent, the fact that an
additional witness, who was incompetent also
attested to the will, cannot impair the validity.
Attestation and Subscription Distinguished
ATTESTATION SUBSCRIPTION
an act of the senses an act of the hand
mental act mechanical act
purpose is to render purpose is
available proof during identification
probate of will
C.
MARGINAL SIGNATURES
GENERAL RULE: the testator or the person
requested by him to write his name and the
instrumental witnesses must affix their
signature on the left margin of each and every
page of the will.
EXCEPTIONS:
1. in the last page, when the will consists of
two or more pages
2. when the will consists of only one page
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3. when the will consists of two pages, the
first of which contains all the testamentary
dispositions and is signed at the bottom by
the testator and the witnesses and the
second contains only the attestation
clause duly signed at the bottom by the
witnesses.
• The inadvertent failure of one witness to affix
his signature to one page of a testament, due
to the simultaneous lifting of two pages in the
course of signing, is not per se sufficient to
justify denial of probate (Icasiano v. Icasiano, GR
No. L-18979 June 30, 1964).
• If the signatures are placed on the RIGHT
side, the will remains valid. The reason of the
law is accomplished. Thus, the word “left” is
merely directory.
D.
PAGE NUMBERINGS
Written correlatively in letters placed on the upper
part of each page
• This is not necessary when the will is written
on one sheet only.
E.
ACKNOWLEDGMENT
Done before a notary public by the testator and
the instrumental witnesses.
! The notary public before whom the will was
acknowledged cannot be considered as the
third instrumental witness since he cannot
acknowledge before himself his having signed
the will. To allow such would have the effect
of having only two attesting witnesses to the
will which would be in contravention of Arts.
805 and 806 (Cruz v. Villasor, GR No. L-32213 Nov.
26, 1973).
F.
ATTESTATION CLAUSE (AC)
Memorandum or record of facts wherein the
witnesses certify that the will has been
executed before them, and that it has been
executed in accordance with the formalities
prescribed by law.
Purpose: In case of failure of memory of the
witnesses or in case such witnesses are no
longer available, such parts may still be
proved.
Contents:
1. The number of pages used
Even if the number of pages is omitted
in the AC, as long as there is an
acknowledgment clause which states the
number of pages or the will itself
mentioned such number of pages, it may
still be considered as valid (Taboada v. Rosal,
GR No. L-36033 November 5, 1982)
MEMORY AID IN CIVIL LAW
2. The fact that the testator signed the will
and every page thereof, or caused some
other person to write his name, under his
express direction, in the presence of the
instrumental witnesses;
3. That the witnesses witnessed and signed
the will and all the pages thereof in the
presence of the testator and of one
another.\
NOTE: Absence of this clause will render the will a
nullity.
TEST OF PRESENCE
! Not whether they actually saw each other
sign, but whether they might have seen each
other sign had they chosen to do so
considering their mental and physical
condition and position with relation to each
other at the moment of inscription of each
signature.
! The AC need not be written in a language or
dialect known to the testator nor to the
attesting witnesses since it does not form part
of the testamentary disposition.
! The law refers to page and not to sheet or
leaf or folio, so every page used in the will
should be signed on the left margin.
! An AC need be signed ONLY by the
witnesses and not by the testator as it is a
declaration made by the witnesses.
Effects of Defects or Imperfections in the
Attestation Clause:
GENERAL RULE: The will shall be invalidated if
the defect of the attestation clause:
1. goes into the very essence of the clause
itself
2. consists in the omission of one, some, or
all of the essential facts, which cannot be
cured by an examination of the will itself
3. is substantial in character
EXCEPTION: Doctrine of Liberal Interpretation
In the absence of bad faith, forgery, fraud, or
undue and improper pressure and
influence, defects and imperfections in the
form of attestation or in the language used
therein shall not render the will invalid if it is
proved that the will was in fact executed
and attested in substantial compliance with
Art. 805 (formal requirements).
Purposes of Requiring Witness to Attest and
to Subscribe to a Will:
1. identification of the instrument
2. protection of the testator from fraud and
deception
San Beda College of Law
3. the ascertainment of the testamentary
capacity of the testator
Pointers:
1. Date of will:
a. ordinary will: not an essential part;
Reason: it would still be dated in its notarial
acknowledgment
b. holographic will: an essential part.
Reason: the testator may make more than
one will that it may happen that the testator
was incapacitated during the execution of the
first will and capacitated during the execution
of the second will.
2. Failure or error to state the place of
execution will not invalidate the will.
3. Signing of a will by the testator and
witnesses and acknowledgment before a
notary public, need not be a single act.
4. Testamentary capacity must also exist at
the time of acknowledgment.
Additional Requirements for Special Cases
1. Deaf or deaf–mute testator (Art. 807):
a) personal reading of the will, if able to do
so; OR
b) if not possible, designation of 2 persons
to read the will and communicate to him,
in some practicable manner, the contents
thereof.
2. Blind testator (Art. 808):
Double–reading requirement:
a. first, by one of the subscribing witnesses;
and
b. second, by the notary public before whom
the will is acknowledged.
• Art. 808 applies not only to blind testators
but also to those who, for one reason or
another are incapable of reading their
wills (e.g. poor, defective or blurred
vision).
• In a case where the testator did not read
the final draft of the will, but the lawyer
who drafted the document, read the same
aloud in the presence of the testator, 3
witnesses, and notary public, the Court
held that the formal imperfections should
be brushed aside when the spirit behind
the law was served though the letter was
not (Alvarado v. Gaviola, GR No. 74695
September. 14, 1993).
WITNESS TO NOTARIAL WILLS (Arts. 820 & 821)
Requirements:
1. of sound mind;
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2. able to read and write;
3. not blind, deaf or dumb;
4. at least 18 years of age;
5. domiciled in the Philippines; and
6. has not been convicted of falsification of a
document, perjury, or false testimony
NOTE: A witness need not know the contents of
the will, and need not be shown to have had a
good standing in the community where he lives.
The testator’s creditors can be competent
witnesses to his will (Art. 824).
INTERESTED WITNESS
One who is incapacitated from succeeding from
the testator by reason of a devise/legacy or
other testamentary disposition therein in his
favor, or in favor of his spouse, parent, or child.
Effects:
1. His competence as a witness shall subsist;
but
2. The devise or legacy in his favor or in
favor of his spouse, parent or child shall
be void.
EXCEPTION: When there are three other
competent witnesses to such will (Art. 823)
EFFECT OF SUBSEQUENT INCOMPETENCY
If the witnesses attesting the execution of a will
are competent at the time of attesting, their
becoming subsequently incompetent shall not
prevent the allowance of the will (Art. 822).
HOLOGRAPHIC WILL (Art. 810) (SLED)
a. Entirely written by the hand of the testator;
b. Completely dated by the hand of the
testator
c. Entirely signed by the hand of the testator.
d. Executed in a language or dialect known to
the testator
Purpose: to safeguard the authenticity of the will
and deter or prevent any possible insertion or
interpolation by others or any possible forgery
NOTE: The law exacts literal compliance with
these requirements. THE DOCTRINE OF
LIBERAL INTERPRETATION CANNOT BE
APPLIED.
Nevertheless, the Court held in that as a general
rule, the “date” in a holographic will should
include the day, month, and year of its
execution. However, when there is no
appearance of fraud, bad faith, undue
influence and pressure and the authenticity of
the will is established and the only issue is
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Wills & Succession
whether or not the date “FEB./61” appearing
on the will is a valid compliance with Art. 810,
probate of the holographic will should be
allowed under the principle of substantial
compliance (In the matter of Intestate Estate of Andres
de Jesus and Bibiana Roxas de Jesus, GR No. L-38338,
January 28, 1985).
Probate of Holographic Will (Art. 811)
Rule in Case of Insertion, Cancellation,
Erasure or Alteration: Testator must
authenticate the same by his FULL
SIGNATURE (Art. 814).
Effects of Insertions or Interpolations by 3rd
Persons:
1. If the insertion was made after the
execution of the will, but without the
consent of the testator, such insertion is
considered as not written, because the
validity of the will cannot be defeated by
the malice or caprice of third person.
2. If the insertion after the execution of the
will was with the consent of the testator,
but was not authenticated by his signature
the will remains valid but the insertion
is void.
However, in the case of Kalaw v.
Governing Law on Formalities
Relova, G.R. No. L-40207, September 28,
1984, the holographic will in dispute had
only one substantial provision, which was
altered by substituting the original heir with
another, but which alteration did not carry
the requisite of full authentication by the
full signature of the testator, the effect
must be that the entire will is voided or
revoked for the simple reason that nothing
remains in the will after that which could
remain valid.
3. If the insertion made by a third person
after the execution is validated by the
testator by his signature thereon, then the
insertion becomes part of the will, and the
entire will becomes void, because of
failure to comply with the requirement that
it must be wholly written by the testator.
4. If the insertion made by a third person is
made contemporaneous to the execution
of the will, then the will is void because it
is not written entirely by the testator.
Rules in Case of Subsequent Dispositions
a. SEVERAL DISPOSITIONS WERE
SIGNED BUT NOT DATED AND THE
LAST DISPOSTITION HAS A
SIGNATURE AND DATED – VALID
the date on the last disposition validates
the dispositions preceding, whatever be
the time of prior dispositions. This gives
rise to the presumption that all the
dispositions were made simultaneously.
b. NOT SIGNED BUT DATED – VOID
MEMORY AID IN CIVIL LAW
the presence of the date renders the will
void on separate dates and not in its
entirety. Only the last disposition is valid.
c. SIGNED BUT NOT DATED – VOID, but
does not affect the validity of the other
dispositions or the will itself.
1. If UNCONTESTED, requires that at least 1
witness who knows the handwriting and
signature of the testator explicitly declare
that the will and signature are in the
handwriting of the testator; if none, expert
testimony may be resorted to.
2. If CONTESTED, requires at least 3 of
such credible witnesses, if none, resort to
the testimony of an expert witness.
A photostatic or xerox copy of a lost or
destroyed holographic will may be
admitted because the authenticity of the
handwriting of the deceased can be
determined by the probate court, as
comparison can be made with the
standard writings of the testator (Rodelas v.
Aranza, GR No. L-58509, December 7, 1982).
1. As to time:
The validity of a will as to its form depends
upon the observance of the law in force
at the time it is made. Its intrinsic validity,
however, is judged at the time of the
decedent’s death by the law of his
nationality.
2. As to place (Arts. 815 – 817):
• Filipino testator executing a will in the
Philippines: Philippine law
• Filipino testator executing a will
outside of the Philippines: either
a. The law of the country in which it
is executed; or
b. The law of the Philippines.
• Alien testator executing a will in the
Philippines: either
a. The law of the Philippines; or
b. The law of the country of which he
is a citizen or subject.
• Alien testator executing a will outside
of the Philippines: either
a. The law of the place where it is
executed; or
b. The law of the place in which he
resides; or
c. The law of his country; or
d. The law of the Philippines.
San Beda College of Law 65
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Aspects of the Will Governed by National Law
of the Decedent (Arts. 1039 and 16)
a. Order of succession
b. Capacity to succeed
c. Amount of successional rights
d. Intrinsic validity
JOINT WILLS
a single testamentary instrument which
contains the wills of two or more persons,
jointly executed by them, either for their
reciprocal benefit or for the benefit of a third
person
" This is prohibited under Art. 818
Kinds:
a. Mutual wills – executed pursuant to an
agreement between two or more persons to
dispose of their property in a particular
manner, each in consideration of the other
separate wills of 2 persons, which are
reciprocal in their provisions.
b. Reciprocal wills – the testators name each
other as beneficiaries under similar
testamentary plans
• A will that is both joint and mutual is one
executed jointly by two or more persons, the
provisions of which are reciprocal and which
shows on its face that the devises are made
in consideration of the other. Such is
prohibited (Art. 819).
• This prohibition is applicable only in joint wills
executed by Filipinos in a foreign country; it
does NOT APPLY to joint wills executed by
aliens.
Reasons:
a. A will is purely personal and unilateral act
b. Contrary to the revocable character of a
will
c. May expose the testator to undue
influence, and may even induce one of
the testators to kill the other.

Codicil and Incorporation by Reference

CODICIL 2. The will must clearly describe and identify
the same, stating among other things the
A supplement or addition to a will, made after
number of pages thereof;
the execution of a will and annexed to be
taken as a part thereof, by which any 3. It must be identified by clear and
disposition made in the original will is satisfactory proof as the document or
explained, added to, or altered (Art. 825). paper referred to therein;
• It refers to the original will. If there is 4. It must be signed by the testator and the
entirely no reference at all, then it is witnesses on each and every page, except
considered as the new will. in case of voluminous books of account or
inventories.
• To be effective, it should follow the
formalities of a notarial or holographic will. NOTE: When in a will, reference is made to an
inventory of the properties of the testator, which
• Its execution has the effect of republishing
has thus been made part a part of the will, if the
the will as modified.
will has an attestation clause that meets the
Incorporation by Reference (Art. 827) requirements of the law, no attestation clause is
necessary for the said inventory anymore (Unson v.
• Contemplates only lists of properties,
Abella., G.R. No. 17857, June 12, 1922).
books of accounts, voluminous documents
or inventories.
• Provisions which are in the nature of
testamentary dispositions must be
contained in the will itself.
• Parole evidence may be admitted to prove
the identity of the document as
incorporated.
Requisites for a Valid Incorporation by
Reference (Art. 827):
1. The document or paper referred to in the
will must be in existence at the time of the
execution of the will;
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Revocation of Wills and Testamentary Dispositions
REVOCATION
An act of the mind, terminating the potential
capacity of the will to operate at the death
of the testator, manifested by some
outward or visible act or sign, symbolic
thereof.
• A will maybe revoked by the testator at
any time before his death.
• Any waiver or restriction of this right is void
(Art. 828).
Laws Which Govern Revocation (Art. 829)
1. If the revocation takes place in the
Philippines, whether the testator is
domiciled in the Philippines or in some
other country, it is valid when it is in
accordance with the laws of the
Philippines
2. If the revocation takes place outside the
Philippines, by a testator who is domiciled
in the Philippines, it is valid when it is in
accordance with the laws of the
Philippines (Art. 829)
3. Revocation done outside the Philippines,
by a testator who does not have his
domicile in this country, is valid when it is
done according to the:
a. laws of the place where the will was
made, or
b. laws of the place in which the testator
had his domicile at the time of
revocation (Art. 829)
Modes of Revocation (Art. 830)
1. By implication of law:
a. legal separation revokes testamentary
provisions in favor of the offending
spouse;
b. preterition revokes the institution of
heir;
c. judicial action for recovery of debt
revokes a legacy of credit/remission of
debt;
d. transformation, alienation, or loss of
bequeathed property revokes a legacy
of such property;
e. act of unworthiness by an heir,
devisee/legatee revokes testamentary
provisions in his favor;
f. if both spouses of the subsequent
marriage acted in bad faith, said
marriage shall be void ab initio and
testamentary dispositions made by
one in favor of the other are revoked
MEMORY AID IN CIVIL LAW
by operation of law (Art. 44, Family Code);
and
g. void ab initio or annulled marriages
revoke testamentary dispositions
made by one spouse in favor of the
other (Art. 50, Family Code).
2. By some will, codicil, or other writing,
executed as provided in case of wills,
which may either be:
a. Express – when there is a revocatory
clause expressly revoking the
previous will or a part thereof
1. subsequent will
2. codicil
3. non–testamentary writing
b. Implied – when the provisions thereof
are partially or absolutely inconsistent
with those of the previous wills
1. subsequent will
2. codicil
• Subsequent wills which do not revoke
the previous ones in an express
manner, annul only such dispositions
in the prior wills as are inconsistent
with or contrary to those contained in
the later wills (Art. 831).
3. By burning, tearing, cancelling, or
obliterating the will.
Requisites:
a. testamentary capacity at the time of
performing the act of destruction;
b. intent to revoke (animus revocandi);
c. actual physical act of destruction;
d. completion of the subjective phase;
and
e. performed by the testator himself or
by some other person in his presence
and express direction
• LIST IS NOT EXCLUSIVE
NOTE: Revocation is a personal act of the
testator. He cannot delegate to an agent the
authority to do the act for him. Another person,
however, may be selected by him as an
instrument and directed to do the revocatory acts
in his presence. A destruction not accomplished
in the testator’s presence is an ineffective
revocation of the will.
DOCTRINE OF PRESUMED REVOCATION
1. Where the will cannot be found following the
death of the testator and it is shown that it
San Beda College of Law
was in the testator’s possession when last
seen, the presumption is, in the absence of
other evidence, that he must have destroyed
it animo revocandi.
2. Where the will cannot be found following the
death of the testator and it is shown that the
testator had ready access to it, the
presumption is, in the absence of other
evidence, that he must have destroyed it
animo revocandi.
3. Where it is shown that the will was in the
custody of the testator after its execution, and
subsequently, it was found among the
testator’s effects after his death in such state
of mutilation, cancellation or obliteration as
represents a sufficient act of revocation within
the meaning of the applicable statute, it will be
presumed, in the absence of evidence to the
contrary, that such act was performed by the
testator with the intention of revoking the will.
DOCTRINE OF DEPENDENT RELATIVE REVOCATION
(Art. 832)
If a testator revokes a will with a present intention
of making a new one immediately and as a
Republication and Revival of Wills
REPUBLICATION
Act of the testator whereby he reproduces in a
subsequent will the dispositions contained in a
previous will which is void as to its form or
executes a codicil to his will.
Kinds:
1. Express (Art. 835) – if the testator
reproduces in a subsequent will
dispositions contained in a previous one
which is void as to its form.
2. Constructive (Art. 836) – if the testator for
some reason or another executes a codicil
to his will.
Effects of Republication by Virtue of a Codicil:
1. Codicil revives the previous will
2. The old will is republished as of the date of
the codicil — makes it effective as it were,
from the new and later date.
3. A will republished by a codicil is governed
by a statute enacted to the execution of
the will, but which was operative when the
codicil was executed.
• The purpose of republication is to cure the
will of its formal defects.
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substitute, and the new will is not made, or if
made, fails of effect of any reason, it will be
presumed that the testator preferred the old
will to intestacy, and the old one will be
admitted to probate in the absence of evidence
overcoming the presumption, provided its
contents can be ascertained.
" Being merely a presumed intention, it does
NOT prevail as against actual evidence of the
testator’s intention.
NOTE: Where the act of destruction is connected
with the making of another will so as to fairly raise
the inference that the testator meant the
revocation of the old to depend upon the efficacy
of the new disposition intended to be substituted,
the revocation will be conditional and dependent
upon the efficacy of the new disposition; and if for
any reason, the new will intended to be made as a
substitute is inoperative, the revocation fails and
the original will remains in full force (Vda. De Molo v.
Molo, GR No. L-2538 September. 21, 1951).
REVOCATION BY MISTAKE
A revocation of a will based on a false cause or an
illegal cause is null and void (Art. 833).
REVIVAL
Restoration to validity of a previously revoked will
by operation of law.
Republication and Revival Distinguished
REPUBLICATION REVIVAL
Takes place by an act of Takes place by
the testator operation of law.
Corrects extrinsic and Restores a revoked will
intrinsic defects.
PRINCIPLE OF INSTANTER
The express revocation of the first will renders it
void because the revocatory clause of the
second will, not being testamentary in
character, operates to revoke the previous will
instantly upon the execution of the will
containing it.
Kinds:
1. EXPRESS revocation of the first will
If after making a will, the testator makes a
second will expressly revoking the first, the
revocation of the second will DOES NOT
revive the first will, which can be revived only
by another will or codicil (Art. 837).
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Wills & Succession
2. IMPLIED revocation of the first will
Where there is merely an inconsistency
between two wills, but there is no revocatory
clause, upon destruction of the second will,
Allowance and Disallowance of Wills
PROBATE
A special proceeding MANDATORILY required
for the purpose of establishing the validity
of a will.
• No will shall pass either real or personal
property unless it is proved and allowed in
accordance with the Rules of Court (Art.
838).
Kinds:
1. Ante Mortem – during the lifetime
2. Post Mortem – after the testator’s death
• The statute of limitations is not applicable
to probate of wills.
GENERAL RULE: In probate proceedings, the
probate court cannot inquire into the intrinsic
validity of testamentary provisions. The only
questions that may be determined by the
probate court are the following: (ICE)
1. Identity of the will (whether the will
presented is the last will and testament of
the testator)
2. testamentary capacity of the testator at
the time of the execution of the will; and
3. due execution of the will (whether there
was compliance with the requisites and
solemnities prescribed by law)
EXCEPTION: For practical considerations;
! In Nuguid v. Nuguid (GR No. L-23445 June 23,
1966), the Supreme Court held that, if the case
were to be remanded for probate of the will,
nothing will be gained. On the contrary, this
litigation would be protracted. And for aught
that appears in the record, in the event of
probate or if the court rejects the will,
probability exists that the case will come up
once again before us on the same issue of
the intrinsic validity or nullity of the will.
RESULT: waste of time, effort, expense, plus
added anxiety.
! In Nepomuceno v. CA (GR No. L-62952 October
9, 1985), the Court ruled that “the court can
inquire as to the intrinsic validity of the will
because there was an express statement that
the beneficiary was a mistress.
NOTE: Criminal action will not lie against the
forger of a will which had been duly admitted to
probate by a court of competent jurisdiction
(Mercado v. Santos, GR No. 45629 September 22, 1938).
MEMORY AID IN CIVIL LAW
the first was AUTOMATICALLY REVIVED,
regardless of the intention of the testator
provided that the first will has been preserved
undestroyed.
The fact that the will has been allowed without
opposition and the order allowing the same has
become final and executory is not a bar to the
presentation of a codicil, provided it complies with
all the formalities for executing a will. It is not
necessary that the will and codicil be probated
together as the codicil may be concealed by an
interested party. They may be probated one after
the other (Macam v. Gatmaitan, GR No. 40445. August 17,
1934).
When a will is declared void because it has not
been executed in accordance with the
formalities required by law, but one of the
intestate heirs, after the settlement of the debts
of the deceased, pays a legacy in compliance
with a clause in the defective will, the payment
is effective and irrevocable (Article 1430, NCC;
Natural Obligations).
Grounds for Disallowance of a Will (Art. 839)
(FIFU SM)
1. Formalities required by law have not been
complied with;
2. Testator was insane, or otherwise
incapable of making a will, at the time of
its execution;
3. Will was executed through force or under
duress, or the influence of fear, or threats;
4. Will was procured by undue and improper
pressure and influence, on the part of the
beneficiary or of some other person;
5. Signature of the testator was procured by
fraud;
6. Testator acted by mistake or did not intend
that the instrument he signed should be
his will at the time of affixing his signature
thereto.
• LIST IS EXCLUSIVE.
NOTE: Fair arguments, persuasion, appeal to
emotions, and entreaties which, without fraud
or deceit or actual coercion, compulsion or
restraint do not constitute undue influence
sufficient to invalidate a will (Barreto v. Reyes, GR
No. L-5830 January 31, 1956).
The burden is on the person challenging the
will to show that such influence was exerted at
the time of its execution.
To make a case of UNDUE INFLUENCE, the
free agency of the testator must be shown to
have been destroyed; but to establish a ground
of contest based on FRAUD, free agency of
San Beda College of Law
the testator need not be shown to have been
destroyed.
Allegations of fraud and undue influence
cannot co–exist because they are mutually
opposed and exclude each other that their
joining as grounds for opposing probate shows
absence of definite evidence against the
validity of the will (Icasiano v. Icasiano, GR No.
L-18979 June 30, 1964)
Institution of Heirs (Arts. 840–856)
INSTITUTION
an act by virtue of which a testator designates
in his will the person or persons who are to
succeed him in his property and
transmissible rights and obligations (Art 840)
" The institution is valid if it is possible to
ascertain with finality the identity of the
instituted heir by intrinsic or extrinsic
evidence.
Requisites for a Valid Institution:
1. The will must be extrinsically valid
2. The institution must be intrinsically valid
3. The institution must be effective
Effect of Lack of Institution (Art. 841)
A will otherwise defective is valid, even if:
1. there is no institution of heir
2. the instituted heir is given only a portion of
the estate
3. the heir instituted should repudiate or be
incapacitated to inherit
• The testamentary dispositions made in
accordance with the law shall be complied
with and the remainder of the estate shall
pass to the legal heirs.
Forms of Institutions (Arts. 843–845):
PRESUMPTIONS
1. Presumption of Equality – When heirs
were instituted without designation of
shares they are deemed to inherit in equal
parts (Art. 846).
This applies only when all of the heirs
are of the same class or juridical condition.
Where there are compulsory heirs
among the heirs instituted, it should be
applied only to the disposable free portion.
2. Presumption of Individuality – When the
testator institutes some heirs individually
and others collectively, those collectively
designated shall be considered as
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Revocation and Disallowance Distinguished
REVOCATION DISALLOWANCE
voluntary act given by judicial decree
of the testator
with or without must always be for a legal
cause cause
may be partial always total except: when the
or total ground of fraud or influence
for example affects only
certain portions of the will
individually instituted, unless it clearly
appears that the intention of the testator
was otherwise (Art. 847).
3. Presumption of Simultaneity – when the
testator calls to the succession a person
and his children, they are all deemed to
have been instituted simultaneously and
not successively (Art. 849).
If there is doubt as to the institution of
the heir, nobody will inherit and intestate
succession shall apply
Institution Based on a False Cause (Art. 850)
GENERAL RULE: The statement of a false
cause for the institution of an heir shall be
considered as not written.
EXCEPTION: If it appears from the face of the
will that the testator would not have made
the institution had he known the falsity of
the cause.
Requisites for the Annulment of Institution of
Heirs:
1. cause of institution of the heirs must be
stated in will;
2. cause must be shown to be false;
3. it must appear from the face of the will that
the testator would not have made the
institution had he known the falsity of the
cause (Austria v. Reyes, GR No. L-23079,
February 27, 1970).
Institutions on Aliqout Parts
1. Rule if the entire inheritance is NOT covered
a. NO intention to become sole heir – mixed
succession (Art. 851)
e.i. A= 2/5 ; B=1/5 ; C= 1/5
The remainder of 1/5 shall pass to the
legal heirs.
b. intention to become the sole heir –
increase proportionately (Art. 852)
2. Rule if more than inheritance is covered –
each part reduce proportionately (Art. 853)
70 MEMORY AID IN CIVIL LAW
Wills & Succession

Art. 852 Art. 853 itself, is void (Nuguid v. Nuguid, GR No.

L-23445 June 23, 1966).
NET ESTATE = 120T NET ESTATE = 120T
Points to Consider:
A= ! ; B= " A= ! ; B= #
A= ! of 120T is 60T A= ! of 120T is 60T • Preterition of the surviving spouse (SS)
B= " of 120T is 30T B= # of 120T is 90T does not entirely annul the institution of
90T 150T the heir since SS is not a compulsory heir
NE(120T) – 90T= 30T NE(120T) – 150T= -30T in the direct line. However, since Article
842 protects the legitime of the SS, the
30T shall be distributed 30T will be DEDUCTED institution is partially annulled by reducing
proportionately b/w A proportionately b/w A the rights of the instituted heir to the extent
and B and B necessary to cover the legitime of SS.
A= (120Tx60T)/90T= 80T A= (120Tx60)/150T= 48T
B= (120Tx30T)/90T= 40T B= (120Tx90)/150T =72T • In case of omission without preterition, the
rule in Art. 855 should be followed.
HENCE: A = 80T HENCE: A = 48T
B = 40T B = 72T Preterition and Disinheritance Distinguished
total is 120T total is 120T
PRETERITION DISINHERITANCE
deprivation of a deprivation of a
PRETERITION (Art. 854) compulsory heir of his compulsory heir of
legitime is tacit his legitime is
Omission in the testator’s will of one, some, or all
express
of the compulsory heirs in the direct line,
whether living at the time of the execution of may be voluntary but always voluntary
the will or born after the death of the testator. the law presumes that it
is involuntary
Requisites:
law presumes that there done with a legal
1. The heir omitted must be a compulsory has been merely an cause
heir in the direct line; oversight or mistake on
2. The omission must be complete and total the part of the testator
in character; and omitted heir gets not if disinheritance is
3. The compulsory heir omitted must survive only his legitime but not lawful,
the testator. also his share in the compulsory heir is
free portion not merely restored to
There is NO Total Omission When:
disposed of by way of his legitime
1. A devise/legacy has been given to the heir legacies/ devises
by the testator
Effect of Predecease
2. A donation inter vivos has been previously
given to the heir by the testator; or • An heir who dies before the testator shall
transmit no right to his own heirs (rule is
3. Anything is left from the inheritance which absolute with respect to a voluntary heir,
the heir may get by way of intestacy. devisee and legatee)
The remedy of the affected heir is • What is transmitted to the representatives
completion of legitime under Art. 906, in of compulsory heir is his right to the
case the value of the property received is legitime and not to the free portion
less than the value of the legitime.
Effect of Incapacity
Effects of Preterition:
• A voluntary heir who is incapacitated to
1. It annuls the institution of heir; succeed from testator shall transmit no
2. The devises and legacies are valid insofar right to his own heirs.
as they are not inofficious; and • A compulsory heir may be represented,
3. If the omitted compulsory heir should die but only with respect to his legitime
before the testator, the institution shall be Effect of Repudiation
effectual, without prejudice to the right of
representation. • Whether voluntary or compulsory, the heir
who repudiates his inheritance cannot
4. Intestate succession ensues. transmit any right to his own heirs.
! Where a one–sentence will institutes the
petitioner as the sole, universal heir and
preterits the parents of the testatrix, and it
contains no specific legacies or bequests,
such universal institution of petitioner, by
San Beda College of Law
SUBSTITUTION
Appointment of another heir so that he may enter
into the inheritance in default of or subsequent
to the heir originally instituted.
The act by which the testator the testator
designates the person/s to take the place of
the heir/s first instituted.
Instances when Substitution Takes Place:
a. instituted heir predeceases the testator;
b. incapacity of the instituted heir to succeed
from the testator; and
c. repudiation of the inheritance
Effect of Substitution:
GENERAL RULE: The substitute shall not only
take over the share that would have passed
to the instituted heir, but he shall be subject
to the same charges and conditions
imposed upon such instituted heir.
EXCEPTIONS:
a. When the will provides to the contrary;
b. When the charges or conditions are
personally applicable only to the heir
instituted.
Kinds:
1. Simple or Common (Art. 859) – that which
takes place when the testator designates one
or more persons to substitute the heirs/s
instituted in case such heir/s should die
before him, or should not wish, or should be
incapacitated to accept the inheritance
2. Brief or Compendious (Art. 860):
brief – there are two or more persons
designated by the testator to substitute
for only one heir
compendious – one heir is designated to take
the place of two or more heirs
3. Reciprocal
when 2 or more persons are not only
instituted as heirs, but are also designated
mutually as substitute for each other.
4. Fideicommissary (Arts. 863–865)
that which takes place, when the fiduciary or
first heir instituted is entrusted with the
obligation to preserve and transmit to a
second heir, the whole or part of the
inheritance, subject to the following
limitations:
a. Substitution must not go beyond one
degree (of relationship) from the heir
originally instituted.
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Substitution of Heirs
b. A fideicommissary substitution is void if
the first heir is not related in the 1st
degree to the second heir (Ramirez v. Vda.
De Ramirez, GR No. L-27952, February 15,
1982)
c. Fiduciary and fideicommissary must be
living at the time of the death of the
testator.
d. Substitution must not burden the legitime
of compulsory heirs.
e. Substitution must be made expressly.
1) by giving it the name of a
fideicommisary substitution;
2) by imposing upon fiduciary the
absolute obligation to preserve and
deliver the property to the
fideicommissary
Requisites of Fideicommisary Substitution:
1. First heir (fiduciary) called to the
succession.
2. An obligation clearly imposed by the
testator (fideicomitente) upon such first
heir to preserve the property and to
transmit it to the second heir.
Without the obligation clearly imposing
upon the first heir the preservation of the
property and its transmission to the
second heir, there is no fideicommissary
substitution (Rabadilla v. CA, GR No. 113725
June 29, 2000)
3. Second heir (fideicommissary) to whom
the property is transmitted by the first heir.
NOTE: Pending transmission of property, the
fiduciary is entitled to all the rights of a
usufructuary, although the fideicommissary is
entitled to all the rights of a naked owner.
Obligation to preserve excludes the right to
dispose.
The second heir inherits not from the first heir
but from the testator.
Void Substitutions (Art. 867)
1. Fideicommissary substitutions which are
not made in an express manner.
2. Provisions which contain perpetual
prohibition to alienate, and even a
temporary one.
The prohibition to alienate is good only
for 20 years, beyond that it is VOID.
3. Those which impose upon the heir the
charge of paying to various persons
successively, beyond the limit in Art. 863,
a certain income or pension.
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4. Those which leave to a person the whole
or part of the hereditary property in order
that he may apply or invest the same
according to secret instructions
communicated to him by the testator.
Conditional, Modal Testamentary Dispositions, and
Testamentary Dispositions with a Term (Arts. 871–885)
GENERAL RULE: The institution of an heir may
be made:
1) Conditionally
2) For a term
3) For a certain purpose or cause (modal).
NOTE: Conditions, terms, and modes are not
presumed; they must be clearly expressed in
the will. The condition must fairly appear from
the language of the will. Otherwise, it is not
binding.
Limitations:
1. The testator cannot impose any charge,
burden, encumbrance, condition, or
substitution whatsoever upon the legitime
of compulsory heirs except when the
testator declares that the hereditary estate
shall not be partitioned for a period which
shall not exceed 20 yrs.
2. Sabinean Doctrine – Impossible
conditions and those contrary to law or
good customs are presumed to have been
imposed erroneously or through oversight,
thus, are considered as not imposed (Art.
873).
3. An absolute condition not to contract a
first marriage is always void and will be
considered as not written (Art. 874).
4. An absolute condition not to contract a
subsequent marriage is generally void,
unless imposed upon a widow or widower
by the deceased spouse or by the latter’s
ascendants or descendants (Art. 874).
Even so, however, the legitime of the
surviving spouse cannot be impaired.
However, the following relative
conditions regarding marriage have been
considered as valid and binding:
a. generic condition to contract
marriage;
b. specific condition to contract
marriage with a determinate
person; and
c. specific condition not to contract
marriage with a determinate
person.
MEMORY AID IN CIVIL LAW
The nullity of the fideicommissary
substitution does not prejudice the validity
of the institution of the heirs first
designated; the fideicommissary clause
shall simply be considered as NOT
WRITTEN (Art. 868).
An absolute condition not to contract
marriage when validly imposed is
resolutory in character.
5. Any disposition made upon the condition
that the heir shall make some provisions in
his will in favor of the testator or of any
other person shall be void (disposicion
captatoria).
6. Conditions imposed by the testator upon
the heirs shall be governed by the rules
established for conditional obligations in all
matters not provided for by the law on
succession.
Kinds of Condition:
1. As to the manner of imposition
a. express – when imposed clearly in the
will
b. tacit – merely inferred from the will
2. As to the effectivity of dispositions
a. suspensive - a condition upon the
fulfillment of which successional rights
are acquired
b. resolutory - a condition upon the
fulfillment of which rights already
acquired are extinguished
3. As to the fulfillment of the conditions
a. potestative - depends exclusively
upon the will of the heir, devisee, or
legatee, and must be performed by
him personally
b. casual - depends upon chance and/or
upon the will of a third person.
4. As to the nature of the condition
a. positive – when it consists of the doing
or giving of something
b. negative – when it consists of not
doing
or giving anything
5. As to the effectiveness of the
conditions
a. proper – when they may take effect
b. improper – when the law does not
allow these conditions to take effect
San Beda College of Law
Kinds of Term (Art. 885)
1. Suspensive Term
Rights are suspended until the arrival of the
date or time designated by the testator.
2. Resolutory Term
Rights are immediately demandable but
subject to extinguishment upon the arrival
of the date or time designated by the
testator.
MODAL INSTITUTION (INSTITUCION SUB
MODO) (Art. 882)
Attachment by the testator to an institution of heir,
or to a devise or legacy, of a statement of the:
a. object of the institution;
b. application of the property left by testator; or
c. charge imposed by him.
LEGITIME
That part of the testator’s property which he
cannot dispose of because the law has
reserved it for certain heirs who are,
therefore, called compulsory heirs.
! The cause of action to enforce a legitime
accrues upon the death of the donor–
decedent since it is only then that the net
estate may be ascertained and on which
basis, the legitime may be determined
(Imperial v. CA, GR No. 112483 October 8, 1999).
COMPULSORY HEIRS (CH)
Those for whom the legitime is reserved by law,
and who succeed whether the testator likes it
or not. They cannot be deprived by the testator
of their legitime except by disinheritance
properly effected.
Kinds of Compulsory Heirs:
1. Primary – those who have precedence
over and exclude other CH (e.g. LCD).
2. Secondary – those who succeed only in
the absence of the primary CH (e.g. LPA
or IP).
3. Concurring – those who succeed
together with the primary or secondary CH
(e.g. ICD and SS).
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NOTES: When in doubt as to whether there is a
condition or merely a mode, consider the same as
mode.
When in doubt as to whether there is a mode or
merely a suggestion, consider same only as a
suggestion.
The ‘condition’ suspends but does not obligate;
the ‘mode’ obligates but does not suspend (for he
who inherits with a mode is already an heir; one
who inherits conditionally is not yet an heir)
DOCTRINE OF CONSTRUCTIVE FULFILLMENT
When without the fault of the heir, an institucion
sub modo cannot take effect in the exact manner
stated by the testator; it shall be complied with in a
manner most analogous to and in conformity with
his wishes (Art. 883).
NOTE: If the condition is casual, the doctrine is
not applicable since the fulfillment of the event
which constitutes the condition is independent of
the will of the heir, devisee/legatee. If the condition
is potestative or mixed, the doctrine is applicable.
Legitimes (Arts. 886–914)
If the testator is a If the testator is an
LEGITIMATE person ILLEGITIMATE person
Legitimate children and Legitimate children and
descendants (LCD) descendants (LCD)
In default of the Illegitimate children and
foregoing, legitimate descendants (ICD)
parents and
ascendants (LPA)
Surviving spouse (SS) In default of the
foregoing, illegitimate
parents only (IP)
Illegitimate children and Surviving spouse (SS)
descendants (ICD)
NOTES: See Sections 17 & 18 of R.A. 8552.
By force of the Family Code, adopted children are
deemed legitimate children of the adopters.
By force of the Family Code, IC without distinction
and so long as their filiation is duly established
or proved in accordance with law, are each
entitled to 1/2 of the legitime of a LC, thus
abrogating the 5:4 ratio between “natural” and
“non–natural” IC.
RULES:
1. Direct descending line
a. Rule of preference between lines
b. Rule of proximity
c. Right of representation ad infinitum in
case of predecease, incapacity, or
74 MEMORY AID IN CIVIL LAW
Wills & Succession

disinheritance (LC: LD only; IC: both LD SURVIV

and ID) LEGITIME NOTES
OR
d. If all the LC repudiate their legitime, the IP Children inherit in the
next generation of LD succeed in their –excluded–
Any amounts established in
own right It depends
child the foregoing rules.
2. Direct ascending line Only the parents are of IC
a. Rule of division by lines IP " are included.
SS " Grandparents and other
b. Rule of equal division ascendants are excluded.
3. Non–impairment of legitime

Legitime of Legitimate Descendants

TABLE OF LEGITIMES • Consists of ! of the hereditary estate of
SURVIV their legitimate parents or ascendants,
LEGITIME NOTES while the other half are at the latter’s free
OR
disposal subject to the rights of the
Divide by the # of LC, illegitimate children and surviving spouse
whether they survive (Art. 888).
LC !
alone or with concurring
CH.
• Rule of proximity applies where the
relative nearest in degree excludes the
1 LC ! more distant ones, saving the right of
SS " representation (e.i. grandchildren are
2 or ! excluded by the presence of their parents
more LC equal to 1 in the estate of their grandparents).
SS LC Legitime of Legitimate Ascendants
LC ! • Consists of ! of the hereditary estate of
IC ! of 1 LC their children and descendants.
All the concurring CH get • Are excluded from the succession if they
from the half free portion,
concur with legitimate children or
the share of the SS having
descendants. However, this rule does not
LC ! preference over that of the
apply if LPA concur with an adopted child
SS " IC, whose share may
for the latter shall not have more
IC ! of 1 LC suffer reduction pro rata
successional rights than an acknowledged
because there is no
natural child (Art. 343).
preference among
themselves. Rules of Division (Art. 890):
Whether they survive 1. The legitime shall be divided between the
LPA ! alone or with concurring LPA equally.
CH.
2. If one of the LPA dies, the whole shall
LPA ! IC succeed in the " in pass to the survivor.
IC " equal shares.
3. If both LPA dies before the testator but:
LPA !
SS " a. Survived by ascendants of equal
degree, legitime shall be divided
LPA ! equally between the paternal and
SS 1/8 maternal lines.
IC "
b. Survived by ascendants of different
Divide equally among the degrees, legitime shall pertain
IC !
IC. entirely to the nearest degree.
SS 1/3
IC 1/3
RESERVA TRONCAL (Art. 891)
1/3 if marriage is in
articulo mortis and The reservation by virtue of which an
SS ! deceased spouse dies ascendant who inherits from his
within 3 mos. after the descendant any property which the latter
marriage. may have acquired by gratuitous title from
IP ! another ascendant or a brother or sister, is
obliged to reserve such property for the
benefit of relatives who are within the 3rd
San Beda College of Law
degree and who belong to the line from
which such property came.
• It constitutes as an exception to both the
system of legitime and the order of
intestate succession.
• Purpose is to prevent persons who are
strangers to the family form acquiring, by
some chance or accident, property which
otherwise would have remained with the
said family
Requisites:
1. The property should have been acquired
by operation of law by an ascendant from
his descendant upon the death of the
latter.
2. The property should have been previously
acquired by gratuitous title by the
descendant from another ascendant or
from a brother or sister.
3. The descendant should have died without
any legitimate issue in the direct
descending line who could inherit from
him.
GF (ORIGIN)
A B F M(RESERVISTA)
(RESERVATARIOS)
P
(PROPOSITUS)
EX. Before GF’s death in 1950, he donated a parcel of
land to his grandson, P, the only child of his deceased
son F. P died in 1960 w/o any heir in the direct
descending line. As a consequence of which, the land
passed to his mother M in accordance with the
intestate succession.
Personal Elements:
1. Originator – the ascendant, or brother or
sister from whom the propositus had
acquired the property by gratuitous title
(e.g. donation, remission, testate or
intestate succession);
2. Propositus – the descendant who died
and from whose death the reservista in
turn had acquired the property by
operation of law (e.g. by way of legitime or
intestate succession). The so–called
“arbiter of the fate of the reserva troncal.”
3. Reservista – the ascendant, not
belonging to the line from which the
property came (Justice Vitug) that is the
only compulsory heir and is obliged to
reserve the property.
Dr. Tolentino is of the view that even if
the reservista and the originator belong to
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the same line, there is still an obligation to
reserve.
4. Reservatarios – the relatives of the
propositus within the 3rd degree and who
belong to the line from which the property
came and for whose benefit the
reservation is constituted. They must be
related by blood not only to the propositus
but also to the originator.
NOTE: In determining the right of the
reservatarios over the reservable property,
there are 2 events to consider:
1. Death of propositus: all qualified
reservatarios acquire an inchoate right.
Reservista owns the property subject to a
resolutory condition.
2. Death of reservista: surviving
reservatarios acquire a perfect right.
The NCC did not provide for the rules on
how the reservatarios would succeed to the
reservista. However, the following rules on
intestacy have been consistently applied:
a. Rule of preference between lines
b. Rule of proximity
c. Right of representation (provided that the
representative is a relative of the
descendant–propositus within 3rd degree,
and that he belongs to the line from which
the reservable property came)
d. “Full blood/double share” rule in Art. 1006
Property Subject to Reservation:
GENERAL RULE: must be the same property
which the reservista had acquired by
operation of law from propositus upon the
death of the latter and which the latter, in
turn had acquired by gratuitous title during
his lifetime from another ascendant,
brother/sister.
EXCEPTION: Substitution of the reservable
property through unavoidable necessity:
(CLAD)
a. Property is consummable
b. Lost/destroyed through the fault of the
reservista
c. Deteriorated through the same cause
d. It has been alienated
Obligations of Reservista:
1. To make an inventory of all reservable
property;
2. To appraise value of all reservable
movable property;
3. To annotate in Registry of Property the
reservable character of all reservable
immovable property;
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4. To secure by mortgage (a) restitution of
movables not alienated, (b) payment of
damages caused by his fault or
negligence, (c) return of price received for
movables alienated and (d) payment of
value of immovable alienated.
NOTE: A reservatario may dispose of his
expentancy to the reservable property during
pendency of the reserve in its uncertain and
conditional form. If he dies before the
reservista, he has not transmitted anything, but
if he survives such reservista, the transmission
shall become effective.
A will may prevent the constitution of a
reserva. In case of testate succession, only the
legitime passes by operation of law. The
propositus may, by will, opt to give the legitime
of his ascendant without giving to the latter
properties he had acquired by gratuitous title
from another ascendant, or brother or sister. In
such case, a reserva troncal is avoided.
However, if the ascendant was not disentitled
in the will to receive such properties, the
reserva minima rule (proportional reserva)
should be followed. The rule holds that all
property passing to the reservista must be
considered as passing partly by operation of
law and partly by will of the propositus. Thus,
one half of the properties acquired by
gratuitous title should be reservable, and the
other half should be free.
Causes for Extinguishment of Reserva
Troncal:
1. Death of ascendant reservista;
2. Death of all relatives of propositus within
the 3rd degree who belong to the line from
which the property came;
3. Loss of the reservable property for causes
not due to the fault or negligence of the
reservista.
4. W a i v e r o r r e n u n c i a t i o n b y t h e
reservatarios;
5. P r e s c r i p t i o n o f t h e r i g h t o f t h e
reservatarios, when the reservista holds
the property adversely against them in the
concept of an absolute owner (10 yrs from
the death of the propositus);
6. Registration by the reservista of the
property as free property under the Land
Registration Act
Principle of Untouchability of the Legitime of
the Compulsory Heir (Art. 904)
1. GENERAL RULE: The testator cannot
deprive his compulsory heirs of their
legitime.
EXCEPTION: valid disinheritance.
2. GENERAL RULE: He cannot impose upon
the same any burden, encumbrance,
MEMORY AID IN CIVIL LAW
condition, or substitution of any kind
whatsoever.
EXCEPTION: express prohibition of the
partition of the estate for a period not
exceeding 20 years.
• Renunciation or compromise as regards
future legitime between the person owning
it and his compulsory heir is VOID (Art.
905).
1. The rights of the heirs are merely
inchoate because it is only perfected
upon the testator’s DEATH. Hence,
there is still nothing to renounce.
2. No contract maybe entered into w/
respect to future inheritance except in
cases expressly authorized by law.
Effects of Incomplete Legitime (Art. 906)
Art. 906 (incomplete
Art. 854 (preterition)
legitime)
Heir not entirely Total omission of the
forgotten heir
Less than the portion Total deprivation of
of the legitime legitime
Remedy is to demand Effect is the total
for completion of annulment of the
legitime institution of heirs
Steps in Determining the Legitime of
Compulsory Heirs IF THERE ARE DONATIONS
(Arts. 908–910):
1. Determination of the gross value of the
estate at the time of the death of the testator;
2. Determination of all debts and charges
which are chargeable against the estate;
Refers to the pre–existing obligations of
the testator during his lifetime, and NOT to the
charges or burdens which are created by the
testamentary dispositions found in the will.
3. Determination of the net value of the estate by
deducting all the debts and charges from the
gross value of the estate;
4. Collation or addition of the value of all
donations inter vivos to the net value of the
estate;
5. Determination of the amount of the legitime
from the total thus found;
Proceeds of an insurance policy where the
beneficiary is a third person or even a
compulsory heir belongs exclusively to the
beneficiary and NOT to the estate of the
insured. Hence, NOT subject to collation.
6. Imputation of the value of all donations inter
vivos made to compulsory heirs against their
legitime and of the value of all donations inter
vivos made to strangers against the
disposable free portion and restoration to the
San Beda College of Law
hereditary estate if the donation is inofficious;
and
7. Distribution of the residue of the estate in
accordance with the will of the testator
COLLATION
1. Fictitious mathematical process of adding
the value of the thing donated to the net
value of the hereditary estate (Art. 908 and
Arts. 1061–1077).
2. Act of charging or imputing such value
against the legitime of the compulsory heir
to whom the thing was donated (Arts. 1061–
1077).
3. Actual act of restoring to the hereditary
estate that part of the donation which is
inofficious in order not to impair the
legitime of compulsory heirs.
Reduction of Testamentary Dispositions and
Donations (Art. 911)
The order of preference is as follows:
1. Legitime of compulsory heirs
2. Donations inter vivos
3. Preferential legacies or devices
4. All other legacies and devises
• If after satisfying the legitime of
compulsory heirs, the disposable portion is
Disinheritance (Arts. 915–923)
Act of the testator in depriving a compulsory heir
of his legitime for causes expressly stated by law.
Requisites:
1. Effected only through a valid will;
2. For a cause expressly stated by law;
3. Cause must be stated in the will itself;
4. Cause must be certain and true;
5. Unconditional;
6. Total; and
7. The heir disinherited must be designated
in such a manner that there can be no
doubt as to his identity.
Effects of Disinheritance:
1. Deprivation of the compulsory heir who is
disinherited of any participation in the
inheritance including the legitime and free
portion.
2. The children/descendants of the person
disinherited shall take his or her place and
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sufficient to cover donations inter vivos,
but not the legacies and devises, the rule
is that such legacies and devises will be
reduced pro rata, after satisfying those
preferential ones.
Formula for Pro Rata Reduction:
Reduced legacy = legacy to be reduced
Disposable Portion total of all legacies
APPLICATION OF Arts. 908 – 911:
FACTS: The net value of the testator’s estate is 40T.
During his lifetime, he donated to X 10T. In his
will, he bequeathed 10T each to Y and Z. He has
a son S. distribute his estate
ANS: 1. Collate or add the donation in favor of X to the
estate . [10T + 40T = 50T]
2. Determine the legitime of his compulsory heir
and subtract it to the net value . In this case, S
as the son is entitled to ! of the estate. [50T x !
= 25T]. Leaving a disposable free portion of 25T.
[50T – 25T(legitime) = 25T].
3. Since, the 10T donation in favor of X can be
imputed to the disposable free portion, it wont be
reduced.
4. However, the amount left out of the disposable
portion will only be 15T which is less than the
amount of legacies made in favor of Y and Z.
Hence, pro rata reduction is necessary.
5. Thus, to determine the legacy in favor of Y
Let ? = reduced legacy
15T = disposable free portion left out
10T = legacy to Y to be reduced
20T = total of all legacies in favor of Y and Z
• ? = 10T
15T 20T
6. Hence, Y is entitled to 7,500. using the same
formula, Z is also entitled to 7,500 for a total of
15T.
shall preserve the rights of compulsory
heirs with respect to the legitime.
3. The disinherited parent shall not have the
usufruct or administration of the property
which constitutes the legitime.
IMPERFECT DISINHERITANCE (Art. 918)
A disinheritance which does not have one or more
of the essential requisites for its validity.
Effects:
1. If testator had made disposition of the
entire estate: annulment of the
testamentary dispositions only in so far as
they prejudice the legitime of the person
disinherited; does not affect the
dispositions of the testator with respect to
the free portion.
2. If testator did not dispose of the free
portion: compulsory heir is given all that he
is entitled to receive as if the
disinheritance has not been made, without
prejudice to lawful dispositions made by
the testator in favor of others.
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3. Devises, legacies and other testamentary
dispositions shall be valid to such extent
as will not impair the legitime.
Imperfect Disinheritance and Preterition
Distinguished
IMPERFECT
PRETERITION
DISINHERITANCE
The person The person omitted
disinherited may be must be a compulsory
any compulsory heir heir in the direct line
Always express Always implied
Always intentional May be intentional or
unintentional
Effect: Partial Effect: Total
annulment of annulment of
institution of heirs institution of heirs
Common Causes for Disinheritance of children
or descendants, parents or ascendants, and
spouse:
1. When the heir has been found guilty of an
attempt against the life of the testator, his/
her descendants or ascendants, and
spouse in case of children and parents;
2. When the heir has accused the testator of
a crime for which the law prescribes
imprisonment for 6 years or more, if the
accusation has been found groundless;
3. When the heir by fraud, violence,
intimidation, or undue influence causes the
testator to make a will or to change one
already made;
4. Refusal without justifiable cause to support
the testator who disinherits such heir.
Peculiar Causes for Disinheritance
1. Children/Descendants:
a. When the child/descendant has been
convicted of adultery or concubinage
with the spouse of the testator;
b. Maltreatment of the testator by word
or deed by the child/descendant;
c. When the child/descendant leads a
dishonorable or disgraceful life;
d. Conviction of a crime which carries
with it a penalty of civil interdiction.
2. Parents/Ascendants:
a. When the parents have abandoned
their children or induced their
daughters to live a corrupt or immoral
life, or attempted against their virtue;
b. When the parent/ascendant has been
convicted of adultery or concubinage
with the spouse of the testator;
c. Loss of parental authority for causes
specified in the Code; and
MEMORY AID IN CIVIL LAW
d. Attempt by one of the parents against
the life of the other, unless there has
been reconciliation between them.
3. Spouse:
a. When the spouse has given cause for
legal separation;
b. when the spouse has given grounds
for the loss of parental authority.
Revocation of Disinheritance:
1. Reconciliation;
2. Subsequent institution of the disinherited heir;
and
3. Nullity of the will which contains the
disinheritance.
• Once disinheritance has been revoked or
rendered ineffectual, it cannot be renewed
except for causes subsequent to the
revocation or based on new grounds.
RECONCILIATION
It is the resumption of genuine cordial relationship
between the testator and the disinherited heir,
approximating that which prevailed before the
testator learned of the cause for disinheritance,
reciprocally manifested by their actions
subsequent to the act of disinheritance.
• A subsequent reconciliation between the
offender and the offended person deprives the
latter of the right to disinherit, and renders
ineffectual any disinheritance that may have
been made (Art. 922).
NOTES: Mere civility which may characterize their
relationship is not enough.
In order to be effective, the testator must pardon
the disinherited heir. Such pardon must
specifically refer to the heir and to the acts
causing the disinheritance. The heir must accept
the pardon.
No particular form is required. It may be made
expressly or tacitly.
Where the cause for disinheritance is likewise a
ground for unworthiness to succeed, what is the
effect of a subsequent reconciliation upon the
heir’s capacity to succeed?
1. If disinheritance has been made: Rule on
reconciliation applies. The disinheritance
becomes ineffective.
2. If disinheritance has not been made: Rule on
reconciliation does not apply. The heir
continues to be incapacitated to succeed
unless pardoned by the testator under Art.
1033. The law effects the disinheritance.
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Legacies and Devises (Arts. 924–959)

Persons charged with legacies and devises: 7. Not belonging to the testator at
1. compulsory heir; the time the will is executed but
Effective
afterwards becomes his by
2. voluntary heir; whatever title (Art. 930).
3. legatee or devisee; 8. Already belonged to the
4. estate legatee/devisee at the time of the
execution of the will even though Ineffective
• If the will is silent as to who shall pay or
another person may have interest
deliver the legacy/devise,
therein (Art. 932)
a. If there is an administration proceeding, it
9. Already belonged to the legatee
constitutes a charge upon the ESTATE .
or devisee at the time of the
b. If there is NO administration proceedings, execution of the will even though Ineffective
it is a charge upon the heirs (Art. 926 2nd it may have been subsequently
par). alienated by him (Art. 933)
• The legatees/devisees shall be liable for the 10. Testator had knowledge that Legatee/
charge to the extent of the value of the the thing bequeathed belonged devisee can
legacy/devise received. to a third person and the legatee/ claim nothing
devisee acquired the property by virtue of
• The compulsory heir shall NOT be liable for
gratuitously after the execution of the legacy/
the charge beyond the disposable portion
the will (Art. 933) devise
given to him. It should not affect his legitime.
11. Testator had knowledge that Legatee/
STATUS OF PROPERTY GIVEN EFFECT ON
the thing bequeathed belonged to devisee can
BY LEGACY/DEVISE THE
a third person and the legatee/ demand
LEGACY/
devisee acquired the property by reimburseme
DEVISE
onerous title (Art. 933) nt from the
1. Belonging to the testator at the heir or estate
time of the execution of the will Effective
until his death ART. 911 ART. 950
2. Belonging to the testator at the Order of preference: Order of preference:
time of the execution of the will (LIPO) (RPSESO)
Revoked
but alienated in favor of a 3rd
1. Legitime of 1. Remuneratory L/D
person (Art. 957)
compulsory heirs; 2. Preferential L/D
3. Belonging to the testator at the No 2. Donations inter vivos 3. L for support
time of the execution of the will revocation. 3. Preferential legacies 4. L for education
but alienated in favor of the There is a or devices 5. L/D of a specific,
legatee/devisee gratuitously (Art. clear 4. All other legacies or determinate thing
931) intention to devices pro rata which forms a part
comply with of the estate
legacy or 6. All others pro rata.
devise.
Application: Application:
4. Belonging to the testator at the Legatee/
time of the execution of the will devisee can (1) When the reduction is (1) When there are no
but alienated in favor of the demand necessary to preserve compulsory heirs and
legatee or devisee onerously reimburseme the legitime of the entire estate is
nt from the compulsory heirs from distributed by the
heir or estate impairment whether there testator as legacies or
are donations inter vivos devises; or
5. Not belonging to the testator at or not; or (2) When there are
the time the will is executed but (2) When, although, the compulsory heirs but
he has ordered that the thing be Effective legitime has been their legitime has
acquired in order that it be given preserved by the testator already been provided
to the legatee/devisee (Art. 931) himself there are for by the testator and
6. Not belonging to the testator at donations inter vivos. there are no
the time the will is executed and donations inter vivos.
the testator erroneously believed Void
NOTES: In case of reduction in the above cases,
that the thing pertained to him
the inverse order of payment should be followed.
(Art. 930)
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When the question of reduction is exclusively
among legatees and devisees themselves, Art 950
governs; but when there is a conflict between
compulsory heirs and devisees and legatees, Art.
911 applies.
Grounds For Revocation of Legacies and
Devises (Art. 957)
1. Testator transforms the thing bequeathed in
such a manner that it does not retain either
the form or the denomination it had.
2. Testator by any title or for any cause alienates
the thing bequeathed, or any part thereof, it
being understood that in the latter case the
legacy or devise shall be without effect only
with respect to the part alienated.
Legal or Intestate Succession
Legal or Intestate Succession
That which is effected by operation of law in the
absence or default of a will.
Causes of Intestacy (Art. 960)
1. If a person dies without a will, or with a void
will, or one which has subsequently lost its
validity;
2. Absence of an institution of heir;
3. Partial institution of heir. In such case,
intestacy takes place as to the undisposed
portion (mixed succession);
4. Non–fulfillment of suspensive condition
attached to the institution of heir;
5. Predecease of the instituted heir;
6. Repudiation by the instituted heir;
7. Incapacity of instituted heir;
8. Preterition. Intestacy may be total or partial
depending on whether or not there are
legacies/devises;
9. Fulfillment of resolutory condition;
10. Expiration of term or period of institution;
11. N o n – c o m p l i a n c e o r i m p o s s i b i l i t y o f
compliance with the will.
NOTE: In all cases where there has been an
institution of heirs, follow the I.S.R.A.I. order of
Justice Paras. If the Institution fails, Substitution
occurs. If there is no substitute, the right of
Representation applies in the direct descending
MEMORY AID IN CIVIL LAW
Except: When the thing should again belong
to the testator after alienation.
3. Thing bequeathed is totally lost during the
lifetime of the testator, or after his death
without the heirs fault
4. Other causes:
A) nullity of the will;
B) n o n c o m p l i a n c e w i t h s u s p e n s i v e
conditions affecting the bequests;
C) sale of the thing to pay the debts of the
deceased during the settlement of his
estate.
• LIST IS NOT EXCLUSIVE.
line to the legitime if the vacancy is caused by
predecease, incapacity, or disinheritance. The
right of Accretion applies to the free portion when
the requisites in Art. 1016 are present. If there is
no substitute, and the right of Representation or
Accretion does not apply, the rules on Intestate
succession shall take over.
RULES
1. Rule of Preference between lines
Those in the direct descending line shall
exclude those in the direct ascending and
collateral lines, and those in the direct
ascending line shall, in turn, exclude those in
the collateral line.
2. Rule of Proximity
The relative nearest in degree excludes the
more distant ones, saving the right of
representation when it properly takes place.
This rule is subject to the rule of preference
between lines.
(Ex: Although the son and the father of the
decedent are both 1 removed from the latter,
the son shall exclude the father.)
3. Rule of Equal Division
Relatives in the same degree shall inherit in
equal shares.
EXCEPTIONS:
a) Division in the ascending line (between
paternal and maternal grandparents);
San Beda College of Law
b) Division among brothers and sisters,
some of whom are of the full and others
of half blood; and
c) Division In cases where the right of
representation takes place.
NOTE: This rule is subject to the rule of
preference between lines.
4. Rule of Barrier between the legitimate
family and the illegitimate family
The illegitimate family cannot inherit by
intestate succession from the legitimate family
and vice–versa.
5. Rule of Double Share for full blood
collaterals
When full and half–blood brothers or sisters,
nephews or nieces, survive, the full blood
shall take a portion in the inheritance double
that of the half–blood.
NOTE: In case of disposition made under Art. 959
in general terms in favor of the testator’s relatives,
only rule of proximity applies (Ex. “to all my
relatives”).
RELATIONSHIP (Arts. 963 – 969)
1. Number of generations determines
proximity.
2. Each generation forms a degree.
3. A series of degrees forms a line.
4. A line may be direct or collateral. A direct
line is that constituted by the series of
degrees among ascendants and
descendants (ascending and descending).
5. A collateral line is that constituted by the
series of degrees among persons who are
not ascendants or descendants, but who
come from a common ancestor.
6. Full blood: same father and mother; half
blood: only one of either parent is the
same.
7. In adoption, the legal filiation is personal
and exists only between the adopter and
the adopted. The adopted is deemed a
legitimate child of the adopter (AP), but
still remains as an intestate heir of his
natural parents and other blood relatives.
Effects of Incapacity or Repudiation (Arts. 968–
969)
• If there are several relatives of the same
degree, and one or more of them are
UNWILLING or INCAPACITATED to succeed,
his portion shall accrue to the others of the
same degree (RIGHT OF ACCRETION) save
the RIGHT OF REPRESENTATION when it
should take place.
• If the inheritance should be REPUDIATED by
the nearest relative, should there be only one,
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or by all the nearest relatives called by law to
succeed, should there be several, those of the
following degree shall inherit in their own right
(per CAPITA) and CANNOT REPRESENT the
person repudiating the inheritance.
RIGHT OF REPRESENTATION (RR) (Arts. 970–
977)
A right created by fiction of law, by virtue of which
the representative is raised to the place and
degree of the person represented, and
acquires the rights which the latter would have
if he were living or if he could have inherited.
Characteristics:
a. a right of subrogation
b. exception to the rule on proximity and equal
division
c. called to succession by law
d. representative succeeds the decedent NOT
the person represented
e. takes place when there is vacancy in the
inheritance brought about by predecease, or
incapacity, or disinheritance
f. as a general rule, exercised only by the
grandchildren of the decedent
TESTAMENTARY INTESTATE
When Takes Place
COMPULSORY HEIR : LEGAL HEIR:
1. dies before the 1. dies before the
testator testator
2. is unworthy to 2. is unworthy to
succeed succeed
3. is disinherited
Effects upon the Division of Estate
Acquires the right with Acquires the right with
respect to the respect to the ENTIRE
LEGITIME LEGAL PORTION
Per stirpes Per stirpes
• In the direct line, representation takes place
ad infinitum in the direct descending line,
never in the ascending.
• In the collateral line, representation takes
place only in favor of the children of brothers
or sisters (nephews and nieces), whether of
the full or half–blood, and only if they concur
with at least 1 uncle or aunt otherwise, they
shall inherit in their own right.
Effects of Repudiation
1. by representative = exist right of
representation (Ex: A child who repudiates his
inheritance when his father died may still
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Wills & Succession

represent the latter when his grandfather SURVIVOR INTESTATE SHARE

dies.)
LPA !
2. by heir = NO right of representation SS 1/4
IC "

INTESTATE OR LEGAL HEIRS 1/2

IP 1/2
Those who are called by law to the succession SS (The law is silent. Apply
either in the absence of a will or of qualified concurrence theory).
heirs, and who are deemed called based on
SS !
the presumed will of the decedent.
BS/NN !
Regular Order of Succession (Decedent is a
First, satisfy legitimes. Estate
legitimate person):
would be insufficient. Reduction
1. Legitimate children or descendants (LCD) 1 LC must be made according to the
SS rules on legitimes. The legitimes
2. Legitimate parents or ascendants (LPA)
IC of LCD and SS shall always be
3. Illegitimate children or descendants (ICD) first satisfied in preference to the
4. Surviving spouse (SS) ICD.

5. Brothers and sisters, nephews and nieces First, satisfy legitimes. There
(BS/NN) would be an excess in the
2 or more LC
estate. Distribute such excess in
6. Other collateral relatives within the 5th SS
the proportion 1:2:2, in
degree (C5) IC
accordance with the
7. State concurrence theory.

Irregular Order of Succession (Decedent is an

illegitimate person):
CARDINAL PRINCIPLES OF INTESTATE SUCCESSION
1. Legitimate children or descendants (LCD) (JUSTICE PARAS)
2. Illegitimate children or descendants (ICD) 1. Even if there is an order of intestate
succession, the Compulsory Heirs (CH) are
3. Illegitimate parents (IP)
never excluded. The Civil Code follows the
4. Surviving spouse (SS) concurrence theory, not the exclusion theory.
5. Brothers and sisters, nephews and nieces 2. Right of Representation (RR) in the collateral
(BS/NN) line occurs only in intestate succession, never
6. State in testamentary succession because a
voluntary heir cannot be represented
Order of Concurrence (collateral relatives are not CH).
1. LCD, ICD, and SS 3. The intestate shares are either equal to or
2. LPA, ICD, and SS greater than the legitime.

3. ICD and SS 4. GENERAL RULE: Grandchildren always

inherit by RR, provided representation is
4. SS and IP proper.
5. BS/NN and SS EXCEPTION: Whenever all the children
6. C5 (alone) repudiate, the grandchildren inherit in their
own right because RR would not be proper.
7. State (alone)
5. Nephews and nieces inherit either by RR or in
their Own Right (OR).
TABLE OF INTESTATE SHARES a. RR: when they concur with aunts and
SURVIVOR INTESTATE SHARE uncles (provided that RR is proper)

Any class alone Entire estate b. OR: when they do not concur with aunts
and uncles
!
1 LC 6. ICD of legitimates cannot represent because
1/2
SS of the barrier, but both the ICD and LCD of
(Diongson v. Cinco, 74 SCRA 118)
illegitimates can.
2 or more LC Consider SS as 1 LC, then
SS divide estate by total number. 7. There can be reserva troncal in intestate
succession.
LPA !
SS ! 8. A renouncer can represent, but cannot be
represented.
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9. A person who cannot represent a near relative degree.

cannot also represent a relative farther in

Mixed Succession or
Partial Intestacy
Mixed Succession or Partial Intestacy
Succession that is effected partly by will and partly
by operation of law.
Rules:
3.
1. The law of legitimes must be brought into
operation in partial intestacy, because the
testamentary dispositions can affect only the
disposable free portion but never the
legitimes.
4.
2. If among the concurring intestate heirs there
are compulsory heirs, whose legal or intestate
portions exceed their respective legitimes,
then the amount of the testamentary
disposition must be deducted from the
disposable free portion, to be borne by all the
intestate heirs in the proportions that they are
entitled to receive from such disposable free
portion as intestate heirs.
If the intestate share of a compulsory heir is
equal to his legitime, then the amount of the
testamentary disposition must be deducted
only from the intestate shares of the others, in
the proportions stated above.
If the testamentary dispositions consume the
entire disposable free portion, then the
intestate heirs who are compulsory heirs will
get only their legitime, and those who are not
compulsory heirs will get nothing.

Provisions Common to Testamentary

and Intestate Successions
Provisions Common to Testamentary and Intestate Successions
RIGHT OF ACCRETION EFFECTS OR PREDECEASE, INCAPACITY,
DISINHERITANCE, OR REPUDIATION IN BOTH
(Arts. 1015–1023) TESTAMENTARY AND INTESTATE SUCCESSION
When two or more persons are called to the same
inheritance, devise or legacy, the part assigned TESTAMENTARY
SUCCESSION INTE-STATE
to one who renounce or cannot receive his CAUSE OF
SUCCESSION
share, or who died before testator, is added or VACANCY Free
Legitime (IS)
incorporated to that of his co–heirs, co– Portion
devisees, or co–legatees.
Predecease 1. RR 1. A 1. RR
Requisites: 2. IS 2. IS 2. IS
1. 2 or more persons must have been called to Incapacity 1. RR 1. A 1.RR
the same inheritance, legacy or devise, or to 2. IS 2. IS 2.IS
the same portion thereof, pro indiviso; and
Disinheri- 1. RR _ _
2. There must be a vacancy in the inheritance, tance 2. IS
legacy or devise (caused by predecease,
incapacity, repudiation, nonfulfillment of Repudiation IS A A
suspensive condition or void or ineffective
testamentary dispositions).
84
Wills & Succession
Summary:
a. In testamentary succession:
(1) Legitime:
• testator during his last illness, or the minister
In case of predecease of an heir,
there is representation if there are
children or descendants; if none, the
others inherit in their own right.
• permitted by law to inherit;
In case of incapacity, results are the
same as in predecease.
• dispositions given by a ward in his favor
In case of disinheritance, results are
the same as in predecease.
• In case of repudiation by an heir, the
others inherit in their own right.
(2) Disposable free portion:
Accretion takes place when requisites
are present; but if such requisites are not
present, the others inherit in their own
right.
b. In intestate succession:
• In case of predecease, there is
representation if there are children or
descendants; if none, the others inherit in
their own right.
• In case of incapacity, results are the
same as in predecease.
• In case of repudiation, there is always
accretion.
CAPACITY TO SUCCEED BY WILL
OR BY INTESTACY (Arts. 1024–1040)
Requisites:
1. The heir, legatee/devisee must be living or
in existence at the moment the succession
opens; and
2. He must not be incapacitated or
disqualified by law to succeed.
Kinds of Incapacity to Succeed:
1. ABSOLUTE INCAPACITY – incapacitated
to succeed in any form
a. Those not living at the time of death
except Arts. 1026, 1027, 1030
b. Those who cannot be identified –
uncertain persons (Art. 845)
c. Those who are not permitted by law to
inherit (Art. 1027 par. c)
2. RELATIVE INCAPACITY – by reason of
special relation
MEMORY AID IN CIVIL LAW
A. Based on Undue Influence or Interest:
(PIGRAP)
1. Priest who heard the confession of the
of the gospel who extended spiritual aid to
him during the same period;
2. Individuals, associations and corporations not
3. G uardian with respect to testamentary
before the final accounts of the guardianship
have been approved, even if the testator
should die after the approval thereof;
nevertheless, any provision made by the
ward in favor of the guardian when the latter
is his ascendant, descendant, brother, sister,
or spouse, shall be valid;
4. Relatives of such priest or minister of the
gospel within the 4th degree, the church,
order, chapter, community, organization or
institution to which such priest or minister may
belong;
5. Attesting witness to the execution of a will,
the spouse, parents or children, or any one
claiming under such witness, spouse, parents
or children; and
6. Physician, surgeon, nurse, health officer or
druggist who took care of the testator during
his last illness.
Not applicable if the one who took care of
the testator is his spouse, ascendant or
descendant
NOTES: Possible only in testamentary succession
Relative in character, if the one incapacitated is
the compulsory heir, it does NOT affect the
legitime but only the free portion.
B. Based on Morality or Public Policy
(Art. 739)
Possible only in testamentary succession
Relative in character, if the one incapacitated is
the compulsory heir, it does NOT affect the
legitime but only the free portion.
1. Those made in favor of a person with whom
the testator was guilty of adultery or
concubinage at the time of the making of the
will.
Previous criminal conviction is NOT
necessary.
2. Those made in consideration of a crime of
which both the testator and the beneficiary
have been found guilty.
Previous criminal conviction is
NECESSARY.
San Beda College of Law 85
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3. Those made in favor of a public officer or his Pardon of Acts of Unworthiness

spouse, descendants and ascendants, by
reason of his public office EXPRESS IMPLIED
made by the execution effected when
of a document or any testator makes a will
C. Based on Acts of Unworthiness
writing in which the instituting the
(A4F3P)
decedent condones the unworthy heir with
Based on offenses committed by the disqualified cause of incapacity knowledge of the
person against the decedent. cause of incapacity
Applicable BOTH in testamentary and legal cannot be revoked revoked when the
succession. testator revokes the
will or the institution
Total in the sense that it extends not only to the
free portion but also to the legitime Time to Determine the Capacity
1. Parents who have abandoned their children or GENERAL RULE: At the moment of the death
induced their daughters to lead a corrupt or of the decedent.
immoral life, or attempted against their virtue;
EXCEPTIONS:
2. Any person who has been convicted of an a. those disqualified under nos. (2), (3)
attempt against the life of the testator, his/her
and (5) of Art. 1032 = necessary to wait
spouse, descendants or ascendants;
until the final judgment is rendered
3. Any person who has accused the testator of a b. disqualified under no. (4) of Art. 1032 =
crime for which the law prescribes
necessary to wait for the expiration of
imprisonment for 6 years or more, if the
the month allowed for the report
accusation has been found groundless;
c. if the institution of the heirs, legacy or
4. Any person convicted of adultery or devise is conditional = time of the
concubinage with the spouse of the testator;
compliance with the condition shall be
The spouse is NOT included. The only considered
time the guilty shall NOT inherit is when the • The action for a declaration of incapacity
offended spouse act positively either by
and recovery of the inheritance, devise or
securing a decree of legal separation or by
legacy shall be 5 yrs. from the time the
disinheriting him or her.
disqualified person took possession
5. Any heir of full age who, having knowledge of thereof.
the violent death of the testator, should fail to
report it to an officer of the law within a month,
unless the authorities have already taken ACCEPTANCE AND
action; this prohibition shall not apply to cases REPUDIATION OF
wherein, according to law, there is no
obligation to make an accusation;
INHERITANCE
(Arts. 1041 – 1057)
6. Any person who by fraud, violence,
intimidation, or undue influence should cause
the testator to make a will or to change one
Characteristics (Art. 1041): (VIR)
already made;
1. Voluntary and free
7. Any person who falsifies or forges a
supposed will of the decedent; and 2. Irrevocable, except if there is vitiation of
consent or an unknown will appears
8. Any person who by the same means prevents
another from making a will, or from revoking 3. Retroactive
one already made, or who supplants,
Requisites (Art. 1043): (DR)
conceals, or alters the latter's will.
1. certainty of the death of the decedent

D. By Operation of Law 2. certainty of the right to the inheritance

Acceptance v. Repudiation:
The moment the testator uses one of the acts of
unworthiness as a cause for disinheritance, he a. Acceptance involves the confirmation of
thereby submits it to the rules on transmission of successional rights, while
disinheritance. Thus, reconciliation renders the repudiation renders such transmission
disinheritance ineffective. ineffective.
b. Repudiation is equivalent to an act of
disposition and alienation.
86
Wills & Succession
c. The publicity required for repudiation is
necessary for the protection of other heirs
and also of creditors.
Who May Accept or Repudiate
• Any person having the free disposal of his
property may accept or repudiate the
inheritance. UNLESS he is incapacitated
such as when he is a minor, deaf–mute
who cannot read and write, insolvent
judicially declared, under civil interdiction,
his GUARDIAN or REPRESENTATIVE
shall be the one to accept or repudiate,
h o w e v e r, j u d i c i a l a u t h o r i z a t i o n i s
necessary in case of repudiation (Art.
1044).
• If the beneficiary happens to be the
POOR:
a. ACCEPTANCE = person designated
by the testator to determine the
beneficiaries and to distribute the
property. In default, the executor.
b. R E P U D I AT I O N = b e n e f i c i a r i e s
themselves once they are determined
(Art. 1044)
• If the beneficiary happens to be a
corporation, association, institution or
entity:
a. ACCEPTANCE = legal representative
b. REPUDIATION = legal representative
+ judicial authorization (Art. 1045)
• If the beneficiary happens to be a married
woman, she may either accept or
repudiate the inheritance w/o her
husband’s consent (Art. 1047).
MANNER OF ACCEPTANCE (Art. 1049)
a. Express Acceptance – one made in a
public or private document.
b. Tacit Acceptance – one resulting from
acts by which the intention to accept is
necessarily implied or which one would
have no right to do except in the capacity
of an heir
Tacit acceptance is presumed from certain
acts of the heir as:
1. When heir sells, donates, or assigns his
right.
2. When heir renounces it for the benefit of
one or more heirs.
3. When renunciation is in favor of all heirs
indiscriminately for consideration
4. Other acts of tacit acceptance
a. heir demands partition of the
inheritance
MEMORY AID IN CIVIL LAW
b. heir alienates some objects of the
inheritance
c. Under Art. 1057, failure to signify
acceptance or repudiation within 30
days after an order of distribution by
the probate court.
MANNER OF REPUDIATION
As to Form: Repudiation must be made in:
1. A public instrument (acknowledged
before a notary public); or
2. authentic document (equivalent of an
indubitable writing; or a writing whose
authenticity is admitted or proved) or by
petition presented to the court having
jurisdiction over the testamentary or
intestate proceeding.
Reason for formality: Law considers that the act
of repudiation is more solemn than the act of
acceptance and that repudiation produces a
more violent and disturbing consequences.
Heir in two capacities: An heir who is such by
will and by law, and he repudiates the
inheritance as a testamentary heir, will be
considered to have repudiated the inheritance
in both capacities. But when an heir repudiates
as a legal heir, he may later on accept as a
testamentary heir.
Effect of Acceptance and Repudiation
GENERAL RULE: irrevocable
EXCEPTIONS:
1. if made through any of the causes that
vitiates consent (mistake, violence,
intimidation, undue influence and fraud)
2. when an unknown will appear
COLLATION (Arts. 1061–1077)
An act of returning or restoring to the common
mass of the estate, either actually or fictitiously,
any property which a person may have
received from the decedent during the latter’s
lifetime, but which is understood for legal
purposes as an advance from inheritance
• Every compulsory heir, who succeeds with
other compulsory heirs must bring into the
mass of the estate any property or right which
he may received from the decedent, during
the lifetime of the latter, by way of donation, or
any other gratuitous title, in order that it may
be computed in the determination of the
legitime of each heir, and in the account of
partition (Art. 1061).
San Beda College of Law 87
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Operations Related to Collation career unless the parents so provide, or

1. Collation – adding to the mass of the
hereditary estate the value of the donation
or gratuitous disposition
2. Imputing or Charging – crediting the
donation as an advance on the legitime (if
the donee is a compulsory heir) or on the
free portion (if the donee is a stranger)
3. Reduction – determining to what extent
the donation will remain and to what extent
it is excessive or inofficious.
4. Restitution – return or payment of the
excess to the mass of hereditary estate.
Persons Obliged to Collate
1. GENERAL RULE: compulsory heirs
EXCEPTIONS:
a. When the testator should have so
expressly provided; and
b. When the compulsory heir should
have repudiated his inheritance
unless they impair the legitime.
Wedding gifts by parents and ascendants
consisting of jewelry, clothing, and outfit
except when they exceed 1/10 of the sum
disposable by will.
! These are imputable to the free portion.
PARTITION AND DISTRIBUTION
OF ESTATE (Arts. 1078–1105)
It is the separation, division and assignment of a
thing held in common among those to whom it
may belong. It includes every act which is
intended to put an end to indivision among co–
heirs, and legatees or devisees, although it
should purport to be a sale, exchange,
compromise, or any other transaction. It is not
subject to any form.
Kinds of Partition:
1. Based on duration

! In these cases, the donation shall be

• provisional or temporary
charged to the free portion and not to • permanent
the legitime.
2. Based on extent of properties involved
2. Grandchildren who survive with their • partial
uncles, aunts, or 1st cousins, and inherit by
right of representation. • total
NOTE: Grandchildren may inherit from 3. Based on who made the partition
grandparent in their own right (i.e. heirs next in • judicial
degree) and not by right of representation if
their parent repudiates the inheritance of the • extrajudicial
grandparent, as no living person can be Who May Effect Partition:
represented except in cases of disinheritance
and incapacity. (In such case grandchildren 1. decedent himself during his lifetime by an
are not obliged to bring to collation what their act inter vivos or by will;
parent has received gratuitously from their 2. 3rd person designated by the decedent.
grandparent)
3. heirs themselves;
What to Collate:
4. competent court;
1. Any property or right received by
gratuitous title during the testator’s lifetime Who Can Demand Partition:

2. All that they may have received from the 1. compulsory heir;
decedent during his lifetime 2. voluntary heir;
3. All that their parents would have brought 3. legatee or devisee;
to collation if alive
4. any person who has acquired interest in
Properties Not Subject to Collation (2 nd the estate.
concept):
When Partition CANNOT be Demanded:
1. Absolutely no collation (all concepts): (PAPU)
Expenses for support, education 1. when expressly prohibited by the testator
(elementary and secondary only), medical himself for a period not exceeding 20
attendance, even in extraordinary illness, years;
apprenticeship, ordinary equipment, or
2. when the co–heirs agreed that the estate
customary gifts (Art. 1067).
shall not be divided for a period not
2. Generally not imputable to legitime: exceeding 10 years, renewable for another
10 years;
Expenses incurred by parents in giving
their children professional, vocational or other 3. when prohibited by law;
88
Wills & Succession
4. when to partition the estate would render it
unserviceable for the use for which it is
intended.
Prohibition to Partition
1. The prohibition to partition for a period not
exceeding 20 years can be imposed on
the legitime.
2. If the prohibition to partition is for more
than 20 years, the excess is void.
3. Even if a prohibition is imposed, the heirs
by mutual agreement can still make the
partition.
PARTITION INTER VIVOS (Art. 1080)
It is one that merely allocates specific items or
pieces of property on the basis of the pro–indiviso
shares fixed by law or given under the will to heirs
or successors.
NOTE: Partition is not itself a mode of acquiring
ownership, nor a title therefore. This partition,
being predicated on succession, necessitates
relationship to the decedent (in case of intestacy)
or a will duly probated (in case of testacy). A
partition inter vivos made in favor of intestate heirs
could be operative. Dispositions, however, to non–
intestate heirs may suffer an impediment unless
based on a valid will, except perhaps when such
dispositions are intended to take effect during the
life of the testator and the formalities of donations
are properly complied with.
PROVISIONAL PARTITION (Art. 1084)
Requisites:
1. Voluntary heir upon whom some condition has
been imposed (this kind of heir cannot
demand partition until the condition has been
fulfilled);
2. Other co-heir/s demand partition; and
3. Other co-heir/s gave security sufficient to
cover the rights of the conditional /
suspensive heir in case the condition should
be complied with.
The partition will become permanent after:
1. The condition was fulfilled;
2. It is known that the condition has not been
fulfilled or can never be complied with.
LEGAL REDEMPTION IN FAVOR OF CO–HEIRS
(Art. 1088)
right of legal redemption predicated upon the fact
that the sale made by the co–heir is effected
before the partition of the estate but after the
death of the decedent
MEMORY AID IN CIVIL LAW
Requisites:
a. there must be several co–heirs
b. that one of them sells his right to a
stranger
c. that the sale is made before the partition
d. that the right of redemption must be
exercised by one or more of the co–heirs
w/in 1 month from the time they were
notified in writing by the co–heir vendor
e. the vendee is reimbursed for the price of
the sale
Effects of Partition (Arts. 1091–1096):
• Confers upon each heir the exclusive
ownership of the property adjudicated.
• After the partition, the co–heirs shall be
reciprocally bound to warrant the title to
(WARRANTY AGAINST EVICTION) and
the quality of (WARRANTY AGAINST
HIDDEN DEFFECTS), each property
adjudicated.
• The obligation of warranty shall cease in
the following cases:
1. when the testator himself has made
the partition unless his intention was
otherwise, but the legitime shall
always remain unimpaired.
2. when it has been expressly stipulated
in the agreement of partition, unless
there has been bad faith.
3. when the eviction was due to a cause
subsequent to the partition, or has
been caused by the fault of the
distributee of the property.
• An action to enforce warranty among co–
heirs must be brought within 10 years from
the date the right of action accrues.
When a Credit is Assigned (Art. 1095)
• The co-heirs are only liable for the
debtor’s insolvency at the time of the
petition (aka warranty of the solvency of
the debtor)
• This warranty prescribes after 5 years
from the date of the partition.
No warranty for bad debts if such are
known to the distributee.
Effects of Inclusion of Intruder in Partition
1. Between a true heir and several mistaken
heirs – partition is VOID.
2. Between several true heirs and a mistaken
heir – transmission to mistaken heir is
VOID.
3. Through error or mistake, share of true
heir is allotted to mistaken heir – partition
shall not be rescinded unless there is bad
faith or fraud on the part of the other
San Beda College of Law 89
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persons interested, but the latter shall be
proportionately obliged to pay the true heir
of his share
NOTE: partition with respect to the
mistaken heir is VOID.
A Void Will May Be a Valid Partition:
1. If the will was in fact a partition; and
2. If the beneficiaries in the void will were
legal heirs.
GROUNDS FOR RESCISSION AND
ANNULMENT OF PARTITION:
Same as in contracts
Another Ground for Rescission:
Lesion – when anyone of the co-heirs
received a share which is " less than that to
which he is entitled to.
• If the lesion is less than 1/4, rescission
will not lie; the proper action is one for
damages.
• The action for rescission on account of
lesion prescribes after 4 years from
judicial approval of the partition (Art. 1100;
Samson v. Araneta, GR No. 39697, April 5,
1934).
Options for the sued heir:
1. Indemnify the plaintiff; or
2. Consent to a new partition.

! END OF WILLS AND SUCCESSION "

90 MEMORY AID IN CIVIL LAW
Obligations & Contracts

CIVIL LAW
OBLIGATIONS AND CONTRACTS
OBLIGATIONS AND CONTRACTS

Obligations
Obligations
OBLIGATION (Art. 1156) d. it must have a possible equivalent in
money.
A juridical necessity to give, to do, or not to do.
NOTES:
• It is impressed with the character of
Form is sometimes added as a fifth requisite but
enforceability.
as a general rule however, it cannot be
Requisites: considered as essential.
1. Juridical/Legal tie – one which binds the The object of an obligation is not thing but a
parties to the obligation; may arise either from particular conduct of the debtor.
bilateral or unilateral acts of persons;
2. Active subject – one who can demand the SOURCES (Article 1157):
fulfillment of the obligation;
3. Passive subject – from whom the obligation is 1. Law
juridically demandable; 2. Contracts
4. Fact, prestation or service – constitutes the 3. Quasi-contracts
object of the obligation
4. Delicts
Requisites of a prestation:
5. Quasi-delicts
a. it must be licit;
NOTES:
b. it must be possible, physically & judicially;
Test to determine whether an obligation arises
c. it must be determinate or determinable; from law or other sources:
and
• IF the law establishes the obligation
and the act or condition upon which it is

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
San Beda College of Law 91
2008 CENTRALIZED BAR OPERATIONS

based is nothing more than a factor for CIVIL OBLIGATION AND NATURAL
determining the moment when it becomes OBLIGATION DISTINGUISHED
demandable, then the source is LAW;
Civil Obligation Natural Obligation
• IF the law merely recognizes or
acknowledges the existence of an 1. Article 1156 1. Article 1423
obligation generated by an act which may 2. Based on 2. Based on equity
constitute a contract, quasi-contract, positive law and natural law
delict or quasi-delict and its purpose is
3. Enforceable by 3. Not enforceable
only to regulate such obligation, then the
court action by court action
ACT ITSELF is the source of obligation.
Obligations arising from contracts have the force c. Moral Obligations – those that cannot
of law between the contracting parties and be enforced by action but which are
should be complied with in good faith (Art. binding on the party who makes it in
1159). conscience and natural law.
“Compliance in good faith” means performance B. Viewpoint of Performance
in accordance with the stipulation, clauses, a. Positive Obligation – to give; to do
terms and conditions of the contract.
b. Negative Obligation – not to do
C. Viewpoint of Subject matter
QUASI-CONTRACTS
a. Personal Obligation – to do or not to do
Those juridical relations arising from lawful,
voluntary and unilateral acts, by virtue of which b. Real Obligation – to give
the parties become bound to each other, iii. Determinate or specific – object is
based on the principle that no one shall be particularly designated or physically
unjustly enriched or benefited at the expense segregated from all other of the same
of another. class
Quasi-Contract vs. Other Sources iv. Generic – object is designated merely
• The act giving rise to quasi-contract must by its class or genus
be lawful, thereby distinguishing it from v. Limited generic thing – when the
crime; generic objects are confined to a
• Voluntary, differentiating it from quasi- particular class, e.g. an obligation to
delict, which is based on fault or deliver one of my horses (Tolentino,
negligence; Volume IV, p. 91)
• Unilateral, to distinguish it from contract D. Viewpoint of Person Obliged
which is based on agreement (Tolentino, a. Unilateral – only one party is bound
Volume IV, p. 68).
b. Bilateral – both parties are bound
Kinds of quasi-contracts
1. Negotiorum Gestio – voluntary
N AT U R E A N D E F F E C T S OF
management of the property or affairs of
OBLIGATION (Art. 1163-1178)
another without the knowledge or consent
of the latter Right of Creditor to the Fruits (Art. 1164)
2. Solutio Indebiti – juridical relation which is 1. Before delivery – personal right
created when something is received when
there is no right to demand it and it was 2. After delivery – real right
unduly delivered thru mistake
PERSONAL RIGHT AND REAL RIGHT DISTINGUISHED
KINDS OF OBLIGATION: Personal Real
A. Viewpoint of Sanction 1. jus ad rem, a right 1. jus in re, a right
a. Civil Obligations – give a right of action enforceable only against enforceable against the
a definite person or whole world
to compel their performance.
group of persons
b. Natural Obligations – not based on 2. right pertaining to the 2. right pertaining to a
positive law but on equity and natural law; person to demand from person over a specific
do not grant a right of action to enforce another, as a definite thing, without a passive
their performance, but after voluntary passive subject, the subject individually
fulfillment by the obligor, they authorize fulfillment of a prestation determined against
retention of what has been delivered or to give, to do or not to whom such right may be
rendered by reason thereof. do. personally enforced
92 MEMORY AID IN CIVIL LAW
Obligations & Contracts

OBLIGATIONS OF THE DEBTOR the contract would be harsh, inequitable,

oppressive or result in an unconscionable
Determinate Generic advantage to the plaintiff (Agcaoili v. GSIS, G.R. No.
1. to perform the 1. to deliver a thing 30056, August 30, 1988).
obligation specifically which is neither of
(Specific performance) superior nor inferior
quality EFFECTS OF BREACH
2. to take care of the thing 2. to be liable for Negative
with the proper diligence damages in case of Positive Personal
Personal
of a good father of a breach of the Obligations
Obligations
family unless the law obligation by reason (Art. 1167)
(Art. 1168)
requires or the parties of delay, fraud,
stipulate another standard negligence or The obligee can: If the obligor
of care (Art. 1163) contravention of the 1. have the obligation does what
tenor thereof performed or executed at the has been
expense of the obligor (Except forbidden
3. to deliver all accessions when the prestation consists of him, the
and accessories of the an act where the personal obligee shall
thing even though they qualifications of the obligor is have the
may not have been the principal motive for the following
mentioned (Art. 1166) establishment of the obligation. remedies:
4. to be liable for damages In such case the remedy is an 1. to have it
in case of breach of the action for damages under Art. undone at
obligation by reason of 1170.) the expense
delay, fraud, negligence or 2. ask that what has been of the
contravention of the tenor poorly done be undone obligor; and
thereof 3. recover damages because 2. to ask for
of breach of the obligation damages

Cases where the remedy granted under Article

RIGHTS OF A CREDITOR 1168 is not available:
Determinate Generic 1. Where the effects of the act which is
1. to compel specific 1. to ask for performance forbidden, are definite in character, in
performance of the obligation which case, even if it is possible for the
obligee to ask that the act be undone at
2. to recover 2. to ask that the the expense of the obligor, consequences
damages in case of obligation be complied contrary to the object of the obligation will
breach of the with at the expense of the have been produced which are permanent
obligation debtor in character.
3. to recover damages in 2. Where it would be physically or legally
case of breach of the impossible to undo what has been undone
obligation because of the very nature of the act itself
or because of a provision of law, or
NOTE:
because of conflicting rights of third
When obligation to deliver the thing and the persons
fruits arises: • In either case, the remedy is to ask for
IF the source of obligation is law, quasi-contracts, damages.
delict, quasi- delict, it arises from the time
Kinds of breach of obligations:
designated by the law creating or regulating
them. 1. Involuntary - debtor is unable to comply
with his obligation because of fortuitous
IF the source is contract, it arises upon perfection
event
unless there is a stipulation to the contrary.
NOTE: debtor is not liable for damages
2. Voluntary - debtor, in the performance of
PRINCIPLE OF BALANCING OF EQUITIES AS APPLIED
the obligation, is guilty of:
IN ACTIONS FOR SPECIFIC PERFORMANCE
a. default (mora)
In decreeing specific performance, equity requires
not only that the contract be just and equitable in b. fraud (dolo)
its provisions, but that the consequences of
c. negligence (culpa)
specific performance likewise be equitable and
just. The general rule is that this equitable relief d. breach through contravention of
will not be granted if, under the circumstances of tenor of the obligation
the case, the result of the specific performance of
San Beda College of Law
NOTE: debtor is liable for damages
A.
DEFAULT (MORA)
Delay in the fulfillment of the obligation with
respect to time.
Requisites in order to consider the obligor in
default:
1. Obligation is demandable and already
liquidated
2. The obligor/debtor delays performance
3. The creditor requires performance
judicially or extra-judicially
Kinds of Default:
1. Mora solvendi - delay of the debtor to
perform his obligation. It may be:
a. Ex re – obligation is to give
b. Ex persona – obligation is to do
Instances where there is no mora
solvendi:
• In negative obligation, because one
can never be late in not doing or not
giving something
• In natural obligation, because the
performance is optional or voluntary
on the part of the debtor
2. Mora accipiendi - delay of the creditor to
accept the delivery of the thing w/c is the
object of the obligation
Requisites:
a. offer of performance by the debtor
who has the required capacity;
b. offer must be to comply with the
prestation as it should be performed;
and
c. creditor refuses the performance
without just cause.
3. Compensatio morae - delay of the parties
or obligors in reciprocal obligation
Rules on Default:
UNILATERAL OBLIGATION
GENERAL RULE: Demand is necessary. “No
demand – no delay”. Therefore the mere
expiration of the period fixed by the parties
is not enough in order that the debtor may
incur in delay.
EXCEPTION:
1. When obligation or law expressly so
declares
2. When the time for fulfillment of the
obligation is of the essence of the contract
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3. When demand would be useless
NOTE: It is not enough that there is specific
date of performance. e.g. “on Jan. 10, 2008”
the words “without the need of demand” should
appear in the face of the instrument
RECIPROCAL OBLIGATIONS
Created or established at the same time, out of
the same cause and which result in mutual
relationship between the parties.
GENERAL RULE: In reciprocal obligations one
party incurs in delay from the moment the
other party fulfills his obligation, while he
himself does not comply or is not ready to
comply in a proper manner with what is
incumbent upon him. The general rule is
that fulfillment by both parties should be
simultaneous
EXCEPTION: When different dates for the
performance of obligation is fixed by the
parties
NOTES: In reciprocal obligation demand is still
necessary only when the respective
obligations are to be performed on separate
dates
If neither party comply with his prestation the
default of one compensates for the
default of the other.
Effects of Mora Solvendi
1. Obligor shall be liable for damages
2. Obligor liable even if loss is due to
fortuitous event
3. Obligor shall bear the risk of loss
Effects of Mora Accipiendi
1. Responsibility is limited to fraud and gross
negligence
2. Obligor is exempted from the risks of loss
of the thing, which automatically pass to
the creditor
3. Expenses incurred by the debtor for the
preservation of the thing after the mora
shall be chargeable to the creditor
4. Obligor does not have to pay for the
interest from the moment of mora
5. Obligee is liable for damages
6. Obligor may relieve himself from the
obligation by the consignation of the thing
B.
FRAUD (DOLO)
Conscious and intentional proposition to evade
the normal fulfillment of an obligation.
• Implies some kind of malice or dishonesty and
it cannot cover cases of mistake and errors in
judgment made is good faith
94 MEMORY AID IN CIVIL LAW
Obligations & Contracts

• In such case obligor can be held liable for CULPA CONTRACTUAL AND CULPA AQUILIANA
damages DISTINGUISHED
NOTE: Future fraud cannot be waived because it Culpa Aquiliana or
is contrary to law and public policy. Culpa Contractual Culpa Ex-Contractu
Waiver of past fraud is valid since such can be (Quasi-Delict)
deemed an act of generosity. What is 1. negligence merely 1. negligence is
renounced is the effect of fraud, particularly the an incident in the substantive and
right to indemnity. performance of an independent
obligation
CIVIL FRAUDS DISTINGUISHED 2. there is always a 2. there may or may
pre-existing contractual not be a pre-existing
Causal Fraud (dolo relation contractual obligation
Fraud/dolo in the causante) and 3. the source of 3. the source of
performance Incidental Fraud (dolo obligation of defendant obligation is the
(Article 1170) incidente) to pay damages is the defendant’s
(Articles 1338 and 1344) breach or nonfulfillment negligence itself
1. Present only during 1. Present only during of the contract
the performance of a the time of birth or 4. proof of the 4. the negligence of
pre-existing obligation perfection of the existence of the the defendant must
obligation contract and of its be proved
2. Purpose is to evade 2. Purpose is to secure breach or nonfulfillment
the normal fulfillment of the consent of the other is sufficient prima facie
the obligation to enter into a contract to warrant recovery

3. Results in the non- 3. Results in the 5. proof of diligence in 5. proof of diligence

fulfillment or breach of vitiation of consent the selection and in the selection and
the obligation supervision of the supervision of the
employees is not employees is a
4. Gives rise to a right 4. Gives rise to a right available as defense defense
of the obligee to of an innocent party to
recover damages from annul the contract if it is Diligence Required
the debtor causal fraud, or to
1. That agreed upon by the parties
recover damages if it is
incidental fraud 2. In the absence of stipulation, that required
by law in the particular case
3. If both the contract and law are silent,
C. diligence of a good father of a family (pater
NEGLIGENCE (CULPA) familias)
Omission of that diligence which is required by the Diligence of Good Father of a Family
nature of the obligation and corresponds with the That reasonable diligence which an ordinary
circumstances of the persons, of the time and of prudent person would have done under the same
the place (Art. 1173) circumstances
NOTE: Negligence can be waived unless the
nature of the obligation or public policy
requires extraordinary diligence as in common NEGLIGENCE AND FRAUD DISTINGUISHED
carrier.
Negligence Fraud
Kinds of Negligence: there is merely abandonment, there is an intent
1. Civil Negligence inattention, carelessness, or to cause damage
lack of diligence or injury
a. Culpa contractual – fault or negligence of
obligor by virtue of which he is unable to NOTE: When the negligence is so gross that it
perform his obligation arising from a pre- amounts to wanton attitude on the part of the
existing contract obligor, the laws in case of fraud shall apply.
b. Culpa aquiliana/quasi-delict – fault or Test of Negligence:
negligence of a person, whose failure to
observe the required diligence to the Did the defendant, in committing or causing
obligation causes damage to another. the negligent act, use reasonable care and
vigilance which a man of ordinary prudence
3. Culpa criminal – fault or negligence in the would have employed under the same
commission of a crime situation? If NOT, he is guilty of negligence.
San Beda College of Law
NOTES: Future negligence can be waived unless
the nature of the obligation and public policy
should require extraordinary diligence as in the
case of common carrier.
Courts may increase or decrease the liability of
the party at fault depending upon the
circumstances of the case.
If the obligor acted in good faith, he shall be
liable only for natural and probable
consequences of the breach of obligation and
which the parties have foreseen or could have
reasonably foreseen at the time the obligation
was constituted.
If the obligor acted in bad faith, the boundaries
between negligence and fraud disappears
altogether. Obligor can be held responsible for
all damages which may be reasonably
attributed to the nonperformance of the
obligation. Any waiver or renunciation which is
made in anticipation of such liability is null and
void.
If there was contributory negligence of the
obligee, the effect is to reduce or mitigate the
damages which he can recover.
If the negligent act or omission of the obligee was
the proximate cause of the event which led to
damage or injury complained of, he cannot
recover.
Robbery, per se, just like carnapping, does NOT
foreclose the possibility of negligence. It is not
a fortuitous event (Sicam, et al. v. Jorge, GR No.
159617, August 8, 2007).
D.
BREACH THROUGH CONTRAVENTION OF
TENOR OF OBLIGATION
Under Art. 1170, the phrase “in any manner
contravene the tenor” of the obligation includes
not only any illicit act which impairs the strict and
faithful fulfillment of the obligation, but also every
kind of defective performance.
DOCTRINE OF RES IPSA LOQUITUR AS APPLIED IN
NEGLIGENCE CASES
• “the thing or transaction speaks for itself”
• When the thing which caused injury, without
fault of the injured person, is under the
exclusive control of the defendant and the
injury is such as in the ordinary course of
things does not occur if he having such
control use proper care, it affords reasonable
evidence, in the absence of explanation from
the defendant, that the injury arose from
defendant’s want of care (Africa v. Caltex, GR No.
L-12986, March 31, 1966 and Republic v. Luzon
Stevedoring, GR No. L-17411, May 19, 1966).
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FORTUITOUS EVENT (Art. 1174)
An event which could not be foreseen, or which,
though foreseen, was inevitable.
Requisites:
1. the event must be independent of the will
of the obligor;
2. the event must be either unforeseeable or
inevitable;
3. the event must be of such a character as
to render it impossible for the obligor to
fulfill his obligation in a normal manner;
and
4. that the obligor must be free from any
participation in the aggravation of the
injury resulting to the obligee .
NOTES: It must not only be the proximate
cause but it must be the ONLY and SOLE
CAUSE.
Contributory negligence of the debtor
renders him liable despite the fortuitous event.
Liability in case of fortuitous event:
GENERAL RULE: No liability in case of fortuitous
event.
EXCEPTIONS:
1. When expressly declared by law
(e.g. Article 552(2), 1165(3), 1268, 1942,
2147, 2148 and 2159 of the Civil Code.)
2. When expressly declared by stipulation or
contract
3. When the nature of the obligation requires
the assumption of risk
4. When the obligor is in default or has
promised to deliver the same thing to 2 or
more persons who do not have the same
interest [Article 1165(3)].
EFFECT OF FORTUITOUS EVENT
Determinate
Generic Obligation
Obligation
obligation is obligation is not extinguished
extinguished based on the rule that a genus
never perishes (genus nunquam
peruit)
USURIOUS TRANSACTION (Art. 1175)
• Usury may be defined as contracting for or
receiving something in excess of the amount
allowed by law for the loan or forbearance of
money, goods, or chattels.
• There is no longer any ceiling in interest rates
on loans pursuant to CB Circular No. 224
issued on Dec. 1, 1982.
96
Obligations & Contracts
EXTINGUISHMENT OF INTEREST AND
PRIOR INSTALLMENTS (Art. 1176)
• Receipt of the principal without reservation as
to the interest shall give rise to a disputable
presumption that the interest has been paid.
• Receipt of the latter installment without
reservation as to prior installments shall
likewise give rise to a disputable presumption
that such prior installments have been paid.
REMEDIES OF CREDITOR TO PROTECT
CREDIT (Art. 1177)
1. To exhaust the property in possession of the
debtor subject to the exemptions provided by
law
2. Accion subrogatoria - to be subrogated to
all the rights and actions of the debtor save
those which are inherent in his person.
Requisites:
a. the debtor to whom the right of action
properly pertains must be indebted to the
creditor
b. the creditor must be prejudiced by the
inaction or failure of the debtor to proceed
against the third person
c. the creditor must have first pursued or
exhausted all the properties of the debtor
which are not exempted for execution
NOTE: Accion subrogatoria is subject to one
very exception – it cannot be exercised in
rights which are purely personal in the sense
that they are inherent in the person of the
debtor.
Different Kinds of Obligation
PURE OBLIGATION
One whose effectivity or extinguishment does
not depend upon the fulfillment or non-
fulfillment of a condition or upon the expiration
of a term or period and characterized by the
quality of immediate demandability.
NOTE: The quality of immediate demandability
is not infringed or violated when a reasonable
period is granted for performance.
CONDITIONAL OBLIGATION
One whose effectivity is subordinated to the
fulfillment or non-fulfillment of a future AND
uncertain fact or event
NOTE: When the debtor binds himself to pay
when his means permit him to do so, the
obligation shall be deemed to be one with a
period (Article 1180).
MEMORY AID IN CIVIL LAW
3. Accion pauliana – to impugn all the acts
which the debtor may have done to defraud
them by means of rescissory action at the
instance of the creditor who is prejudiced.
Requisites: (CASAL)
a. There must be a c reditor prior to
alienation;
b. Debtor has made a subsequent contract
conveying a patrimonial benefit to third
person;
c. The creditor has no other legal remedy to
satisfy his claim;
d. The act being impugned is fraudulent;
and
e. The third person who received the
property is an accomplice in the fraud.
NOTE: 2 nd and 3 rd remedy, however, are
subsidiary to the 1st. Thus, it can only be availed
of in the absence of any other legal remedy to
obtain reparation for the injury.
TRANSMISSIBILITY OF RIGHTS
ACQUIRED BY VIRTUE OF AN
OBLIGATION (Art. 1178)
GENERAL RULE: Rights acquired by virtue of an
obligation are transmissible in character
EXCEPTION:
1. When they are not transmissible by their
very nature e.g. purely personal right
2. When there is a stipulation of the parties
that they are not transmissible
3. Not transmissible by operation of law
Traditional Classifications of Conditions:
1. Suspensive – when the fulfillment of the
condition results in the acquisition of rights
arising out of the obligation.
Resolutory – when the fulfillment of the
condition results in the extinguishment of
rights arising out of the obligation.
2. Potestative – when the fulfillment of the
condition depends upon the will of a party to
the obligation.
Casual - when the fulfillment of the condition
depends upon chance and/or upon the will of
a third person.
Mixed – when the fulfillment of the condition
depends partly upon the will of a party to the
obligation and partly upon chance and/or will
of a third person.
San Beda College of Law
3. Possible – when the condition is capable of
realization according to nature, law, public
policy or good customs
Impossible – when the condition is not
capable of realization according to nature,
law, public policy or good customs
4. Positive – when the condition involves the
performance of an act
Negative – when the condition involves the
omission of an act.
5. Divisible – when the condition is susceptible
of partial realization
Indivisible – when the condition is not
susceptible of partial realization.
6. Conjunctive – when there are several
conditions, all of which must be realized
Alternative – when there are several
conditions, but only one must be realized.
7. Express – when the condition is stated
expressly
Implied – when the condition is tacit
EFFECTS OF SUSPENSIVE,
RESOLUTORY, POTESTATIVE, MIXED,
CASUAL CONDITION (Art. 1181-1182)
1. Suspensive condition:
Obligation shall only be effective upon the
fulfillment of the condition
What is acquired by the obligee upon the
constitution of the obligation is mere hope or
expectancy. However it is protected by law.
BEFORE FULFILLMENT
The demandability as well as the
acquisition or effectivity of the rights arising
from the obligation is suspended.
During the pendency of the condition, the
obligation of obligor to comply with the
prestation is held in suspense until fulfillment
of condition. Consequently, anything he has
paid by mistake during such time may be
recovered.
AFTER THE FULFILLMENT
The obligation arises or becomes effective.
The obligor can thereafter be compelled to
comply with what is incumbent upon him.
2. Resolutory condition
Obligation becomes demandable
immediately after its establishment or
constitution
Although rights are immediately vested in
the obligee, such rights are always subject to
the threat or danger of extinction.
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Principle of retroactivity applies (Art. 1190
par. 1)
BEFORE FULFILLMENT
Commentators are unanimous in holding
that the right explicitly recognized in Art. 1188,
par. 1 in case of a suspensive condition
should likewise be available in obligations
with a resolutory condition.
AFTER FULFILLMENT
Whatever may have been paid or
delivered by one or both of the parties upon
the constitution of the obligation shall have to
be returned upon the fulfillment of the
condition. Therefore there is a return to the
status quo.
However, when condition is not fulfilled,
rights are consolidated and they become
absolute in character.
3. Potestative condition
When it depends exclusively upon the will
of creditor – condition and obligation is
valid.
When it depends exclusively upon the will
of debtor in case of a suspensive
condition – condition and obligation are
void because to allow such condition
would be equivalent to sanctioning
obligations which are illusory and also
constitutes a direct contravention of the
principle announced in Art. 1308.
When it depends exclusively upon the will
of debtor in case of a resolutory
condition – condition and obligation is
valid because in such situation the
position of the debtor is exactly the same
as the position of the creditor when the
condition is suspensive. Moreover, it does
not render the obligation illusory.
NOTE: The rule that conditional obligation
which depends exclusively upon the debtor is
void does not apply in a pre-existing
obligation.
4. Casual condition:
The obligation and condition shall take effect.
5. Mixed condition:
The obligation and condition shall take effect.
EFFECTS OF IMPOSSIBLE/UNLAWFUL
CONDITION (Art. 1183):
Such condition shall annul the obligation which
depends upon them.
NOTES:
In case of pre-existing obligation, only the
impossible condition is void, but not the
obligation.
98
Obligations & Contracts
If obligation is divisible, that part which is not
affected by the impossible or unlawful
condition shall be valid.
If the condition is not to do an impossible thing,
it shall be considered as not having been
agreed upon. Consequently it becomes pure
and immediately demandable.
If impossible/unlawful condition is attached to a
simple or remuneratory donation as well as to
a testamentary disposition, condition is
considered as not imposed while the obligation
is valid.
EFFECTS OF POSITIVE AND NEGATIVE
CONDITION (Art. 1184-1185)
In positive condition, it shall extinguish the
obligation as soon as the time expires or if it
becomes indubitable that the event will not
take place.
In negative condition, it shall render the
obligation effective from the moment the time
indicated has lapsed, or if it has become
evident that the event cannot occur.
The intention of the parties, taking into
consideration the nature of the obligation, shall
govern if no time has been fixed for the fulfillment
of the condition.
DOCTRINE OF CONSTRUCTIVE
FULFILLMENT OF SUSPENSIVE
CONDITION (Art. 1186)
1. The condition shall be deemed fulfilled when
the obligor actually prevented the obligee
from complying with the condition, and that
such prevention must have been voluntary or
willful in character.
2. Such doctrine can only be applied to
suspensive condition and not to resolutory
condition. The article can have no application
to an external contingency which is lawfully
within the control of the obligor (Taylor vs. Uy
Tieng Pao, GR No. L-16109, October 2, 1922).
3. The mere intention of the debtor to prevent its
happening or the mere placing of ineffective
obstacles to its compliance, without actually
preventing fulfillment is not sufficient
(Manresa).
NOTE: When the act of the debtor although
voluntary, did not have for its purpose the
prevention of the fulfillment of the condition, it will
not fall under constructive fulfillment. The same is
true when the debtor acts pursuant to a right
(Tolentino Vol. IV, p.161)
MEMORY AID IN CIVIL LAW
PRINCIPLE OF RETROACTIVITY IN
SUSPENSIVE CONDITION (Art. 1187 par. 1)
Once the event which constitutes the condition is
fulfilled resulting in the effectivity of the obligation,
its effects must logically retroact to the moment
when the essential elements which gave birth to
the obligation have taken place. The basis of this
precept is the fact that the condition which is
imposed is only an accidental, not an essential
element of the obligation.
• Such principle can only apply to consensual
contract. No application to real contracts
which can only be perfected by delivery.
• Neither can it have application to contracts in
which the obligation arising therefrom can
only be realized with successive periods or
intervals (e.g. lease, hire of service, life
annuity).
• Application of the principle must, however be
tempered by principles of justice and
practicability.
EFFECTS OF CONDITIONAL
OBLIGATION TO GIVE (Art. 1187 par. 1)
• When the obligation imposes reciprocal
prestations upon the parties, the fruits and
interests shall be deemed to have been
mutually compensated as a matter of justice
and convenience.
• If the obligation is unilateral, the debtor shall
appropriate the fruits and interests
received, unless from the nature and
circumstances it should be inferred that the
intention of the persons constituting the same
was different
EFFECT OF CONDITIONAL OBLIGATION
TO DO/NOT TO DO (Art. 1187, par.2)
• In obligations to do or not to do, the court
shall determine the retroactive effect of the
conditions that has been complied with.
• The power of the court includes the
determination whether or not there will be any
retroactive effects.
• This rule shall likewise apply in case of an
obligation with a resolutory condition (Art.
1190 par. 3).
PRESERVATION OF CREDITOR’S RIGHT
(Art. 1188 par. 1)
The creditor may, before the fulfillment of the
condition, bring the appropriate action for the
preservation of his rights.
However, this does not grant any preference of
credit but only allows the bringing of the proper
action for the preservation of the creditor’s rights.
San Beda College of Law
EFFECTS OF LOSS, DETERIORATION
AND IMPROVEMENT IN REAL
OBLIGATIONS (Art. 1189)
During the pendency of the condition:
1. Loss (when it perishes; goes out of
commerce; disappears in such a way that
it’s existence is unknown or it cannot be
recovered)
a. without debtor’s fault - obligation is
extinguished
b. with debtor ’s fault - obligation is
converted into one of indemnity for
damages
2. Deterioration
a. without debtor’s fault - impairment to be
borne by the creditor
b. with debtor’s fault - creditor may choose
between bringing an action for rescission
of the obligation OR bringing an action for
specific performance with damages in
either case.
3. Improvement
a. by the thing’s nature or by time - shall
inure to the benefit of the creditor
b. at the debtor’s expense - debtor shall
have no other right than that granted to a
usufructuary (see Arts. 579 and 580)
NOTE: Applies only to determinate things based
on the maxim that the genus of a thing never
perishes (genus nunquam peruit).
Also applies to obligation with a period.
The rules herein provided shall also apply to
whoever has got a duty to return in case of
loss, deterioration or improvement of the thing
in an obligation with a resolutory condition
(Art. 1190, par. 2)
RESCISSION OF RECIPROCAL
OBLIGATIONS IN GENERAL (Art. 1191)
• Such right is implied in reciprocal obligations.
• Rescission under Art. 1191 is the breach of
faith committed by the person who is
supposed to comply with the obligation as
compared to the rescission referred to in Art.
1380 which involves damage or lesion, or
injury to the economic interest of a person.
• The right to rescind belongs to the injured
party alone.
• It can be demanded only if the plaintiff is
ready, willing, and able to comply with his own
obligation and the other is not (Seva vs. Berwin, 48
Phil. 581).
• It must be invoked judicially.
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2008 CENTRALIZED BAR OPERATIONS
• Right to rescind is not absolute in character
because the court is given the discretionary
power to fix a period within which the
obligation in default may be permitted to
comply with what is incumbent upon him (Art.
1191 par. 3). However the discretionary power
of the court cannot be applied to reciprocal
obligations arising from a contract of lease
because they are governed by Art. 1659.
• It is the judgment of the court and not the
mere will of the vendor which produces the
rescission of the sale (Ocejo, Perez & Co. v.
International Banking Corp. GR No. L-10658, February
14, 1918).
• However, where the contract contains a
resolutory provision, judicial permission to
cancel or rescind the contract is no longer
necessary. The only limitation is that it must
not be contrary to law, morals, good customs,
public order or public policy.
• Art. 1191 cannot be applied to contracts of
partnership where a partner fails to pay the
whole amount which he has bound to
contribute to the common fund (see Arts. 1786
and 1788).
• Art. 1191 cannot be applied in sales of real
property or personal property by
installments. The first being governed by
Recto Law while the latter is governed by
Maceda Law.
• The general rule is that rescission will not be
permitted for a slight or casual breach of the
contract, but only for such breaches as are
substantial and fundamental as to defeat
the object of the parties in making the
agreement (Song Fo & Co. v. Hawaiian-Philippines
Co., GR No. 23769, September 16, 1925 ).
• The decree of rescission shall be without
prejudice to the rights of third persons who
have acquired the thing in accordance with
Arts. 1385 and 1388 and Mortgage Law (Art.
1191 par. 4).
RECIPROCAL OBLIGATION
Those which are created or established at the
same time, out of the same cause, and which
result in mutual relationships of creditor and
debtor between the parties.
TACIT RESOLUTORY CONDITION
If one of the parties fails to comply with what is
incumbent upon him, there is a right on the part of
the other to rescind the obligation.
REMEDIES OF INJURED PARTY
(Art. 1191 par. 2)
1. Fulfillment of the obligation with damages
100 MEMORY AID IN CIVIL LAW
Obligations & Contracts

2. Rescission of the obligation with damages tacit – as when a person undertakes to do

some work which can be done only during a
NOTE: Remedies are alternative not cumulative.
particular season
Even after the injured party has chosen fulfillment
5. original period
and such fulfillment should become
impossible, he can still seek the rescission or period of grace (Tolentino Vol. IV, page 188)
resolution of the obligation.
An alternative prayer for fulfillment or rescission in
TERM/PERIOD AND CONDITION DISTINGUISHED
the complaint is not incompatible. The
presumption is that he is leaving the matter to TERM/PERIOD CONDITION
the sound discretion of the court.
1. interval of time which 1. fact or event which
is future and certain is future and uncertain
EFFECTS OF BREACH BY BOTH 2. interval of time which 2. future and uncertain
PARTIES (Art. 1192): must necessarily come, fact or event which
• The liability of the first infractor shall be although it may not be may or may not
equitably tempered by the courts known when happen
3. exerts an influence 3. exerts an influence
• If it cannot be determined which of the parties
upon the time of upon the very
first violated the contract, the same shall be
demandability or existence of the
deemed extinguished, and each shall bear his
extinguishment of an obligation itself
own damages.
obligation
4. does not have any 4. has retroactive
OBLIGATIONS WITH A PERIOD retroactive effect unless effect
there is an agreement to
Those whose demandability or extinguishment the contrary
is subject to the expiration of a term or period.
5. when it is left 5. when it is left
Requisites: exclusively to the will of exclusively to the will
1. future; the debtor, the existence of the debtor, the very
of the obligation is not existence of the
2. certain; and affected obligation is affected
3. possible, legally and physically.

Effect of fortuitous event in obligation with a

TERM/PERIOD
the interval of time, which, exerting an influence
on an obligation as a consequence of a juridical
act, either suspends its demandability or produces
its extinguishment
NOTES: What is suspended by the term is not
the acquisition of the right or the effectivity of
the obligation but its demandability
Fortuitous event does not interrupt the
running of the period
Classification of term/period:
1. suspensive (ex die) – obligation becomes
demandable only upon arrival of a day certain
period:
It only relieves the contracting parties from the
fulfillment of their respective obligations during
the term/period.
PERIOD FOR WHOSE BENEFIT (Art. 1196)
GENERAL RULE: For the benefit of both parties.
EXCEPTION: If it can be proved either from the
tenor of the obligation or other circumstances
that the period has been established in favor
of the creditor or of the debtor.
Period for the Benefit of the Creditor

resolutory (in diem) – arrival of day certain
terminates the obligation
2. legal – granted by law
conventional – stipulated by parties
judicial – fixed by courts
3. definite – date/time is known beforehand
indefinite – date/time of day certain is
unknown although it may not be know when
(e.g. death).
4. express – when specifically stated
Creditor may demand the fulfillment or
performance of the obligation at any time but
the obligor cannot compel him to accept
payment before the expiration of period (e.g.
“on demand”).
Period for the Benefit of the Debtor
Debtor may oppose any premature demand
on the part of the obligee for performance of
the obligation, or if he so desires, he may
renounce the benefit of the period by
performing his obligation in advance.
San Beda College of Law 101
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WHEN COURT MAY FIX PERIOD NOTE: If impairment is without the fault of the
(Art. 1197): debtor, he shall retain the right.

1. If the obligation does not fix a period, but from

its nature and circumstances it can be inferred ALTERNATIVE OBLIGATION
that a period was intended;
2. If the duration of the period depends upon the
will of the debtor; and ALTERNATIVE AND FACULTATIVE OBLIGATIONS,
DISTINGUISHED
3. If the debtor binds himself when his means
permit him to do so (Article 1180). ALTERNATIVE FACULTATIVE
Obligations Obligations
NOTES: Mere silence of the obligation with regard
to the term/period for its fulfillment does not 1. several objects are 1. only one object is due
necessarily mean that the court is empowered to due
fix the duration thereof. 2. may be complied 2. may be complied with
The remedy cannot be applied to contract of with by delivery of one by the delivery of
services. of the objects or by another object or by the
performance of one of performance of another
It cannot be applied to pure obligations. the prestations which prestation in substitution
The only action that can be maintained under Art. are alternatively due of that which is due
1197 is an action to ask the court to fix the 3. choice may pertain to 3. choice pertains only
duration of the term or period. The fulfillment debtor, creditor, or third to the debtor
of the obligation itself cannot be demanded person
until after the court has fixed the period for
compliance therewith, and such period has 4. loss/impossibility of 4. loss/impossibility of
arrived. However, such technicality need not all objects/ prestations the object/prestations
be adhered to when a prior and separate due to fortuitous event due to fortuitous event
action would be a mere formality and would shall extinguish the is sufficient to
serve no other purpose than to delay (Borromeo v. obligation extinguish the obligation
CA, 47 SCRA 65). 5. culpable loss of any 5. culpable loss of the
of the objects object which the debtor
There can be no possibility of any breach of
alternatively due before may deliver in
contract or failure to perform the obligation
the choice is made may substitution before the
unless the period is fixed by courts.
give rise to liability on substitution is effected
When the court has not yet fixed the period it is the part of the debtor does not give rise to
premature to collect any liability on the part
Once fixed by court, the period can no longer be of the debtor
judicially changed. However, Art. 1197, par. 3 NOTE: In facultative obligation, the loss or
does not prohibit parties to set a different deterioration of the thing intended as a substitute
period than that fixed by court. through the fault of the debtor does not render him
liable. However, once the substitution has been
WHEN DEBTOR LOSES RIGHT TO made the debtor shall be liable for the loss or
MAKE USE OF PERIOD deterioration of the substitute on account of his
delay, negligence or fraud.
(Art. 1198) (I-G-I-V-A)

1. when after the obligation has been

RIGHT OF CHOICE IN ALTERNATIVE
contracted, he becomes insolvent, unless he
OBLIGATION (Art. 1200)
gives a guaranty or security for the debt (the
insolvency need not be judicially declared) GENERAL RULE: Right of choice belongs to the
2. when he does not furnish to the creditor the debtor
guaranties or securities which he has EXCEPTION:
promised
1. Expressly granted to creditor
3. when by his own act he has impaired said
guaranties or securities after their 2. Expressly granted to third person
establishment, and when through fortuitous Limitations upon the right of choice:
event they disappear, unless he immediately
gives new ones equally satisfactory The debtor cannot choose prestations/
undertakings which are:
4. when the debtor violates any undertaking, in
consideration of which the creditor agreed to a. Impossible
the period b. Unlawful
5. when debtor attempts to abscond
102
Obligations & Contracts
c. Those which could not have been the
object of the obligation
NOTES: In alternative obligations, choice shall
produce effect only upon communication of the
choice to the other party. No special form is
required for the communication or notification.
Choice of the debtor when communicated to the
creditor does not require the latter ’s
concurrence. To hold otherwise would destroy
the very nature of the right to select and it’s
alternative character.
Once choice is made it can no longer be
renounced and parties are bound thereto.
When choice is rendered impossible through the
creditor’s fault, the debtor may bring an
action to rescind the contract with
damages (Art. 1203).
When converted to simple obligation:
1. When the person who has a right of choice
has communicated his choice.
2. When only one prestation is practicable
(Art. 1202).
EFFECTS OF LOSS OF OBJECTS OF
ALTERNATIVE OBLIGATION
(Art. 1204- 1205)
A. When choice belongs to debtor:
1. Due to Fortuitous Event
a. All are lost – debtor is released from
the obligation
b. Some but not all are lost – deliver
that which he shall choose from
among the remainder
c. Only one remains – deliver that which
remains
2. Debtor’s fault
a. All are lost – creditor shall have a
right to indemnity for damages based
on the value of the last thing which
disappeared or service which
become impossible
b. Some but not all are lost – deliver
that which he shall choose from
among the remainder without
damages
c. Only one – deliver that which remains
B. When choice belongs to creditor:
1. Due to Fortuitous Event
a. All are lost – debtor is released
from the obligation
b. Some but not all are lost –
deliver that which he shall
choose from among the
remainder
MEMORY AID IN CIVIL LAW
c. Only one remains – deliver that
which remains
2. Debtor’s fault
a. All are lost – creditor may claim
the price/value of any of them
with indemnity for damages
b. Some but not all are lost –
creditor may claim any of those
subsisting without a right to
damages OR price/value of the
thing lost with right to damages
FACULTATIVE OBLIGATION (Art. 1206)
An obligation wherein only one object or
prestation has been agreed upon by the parties to
the obligation, but which may be complied with by
the delivery of another or the performance of
another prestation in substitution.
• Art. 1201 can be applied by analogy with
respect to the time/moment when the
substitution will take effect.
EFFECT OF LOSS OF SUBSTITUTE IN
FACULTATIVE OBLIGATION (Art. 1206)
Loss of the thing intended as substitute
A. Before substitution is made:
i. If due to bad faith or fraud of obligor –
obligor is liable
ii. If due to the negligence of the obligor –
obligor is not liable
NOTE:
Accdg. to Jurado: “It is submitted that
whatever may be the cause of the loss/
deterioration of the thing intended as a
substitute, such loss or deterioration shall not
render the debtor liable.”
B. After substitution is made:
The loss or deterioration of the substitute on
account of the obligor’s delay, negligence or
fraud – obligor is liable because once
substitution is made, the obligation is
converted into a simple one with the
substituted thing as the object of the
obligation.
JOINT AND SOLIDARY
OBLIGATIONS
Joint Obligation (Obligación mancomunada)
an obligation where there is a concurrence of
several creditors, or of several debtors, or of
several creditors and debtors, by virtue of
which each of the creditors has a right to
demand, and each of the debtors is bound to
San Beda College of Law
render, compliance with his proportionate part
of the prestation which constitute the object of
the obligation.
Solidary obligation (Obligación Solidaria)
an obligation where there is a concurrence of
several creditors, or of several debtors, or of
several creditors and several debtors, by
virtue of which each of the creditors has the
right to demand, and each of the debtors is
bound to render, entire compliance with the
prestation which constitutes the object of the
obligation.
N AT U R E O F A C O L L E C T I V E
OBLIGATION (Art. 1207)
GENERAL RULE: Obligation is presumed joint if
there is concurrence of several creditors OR
of several debtors OR of several creditors and
debtors in one and the same obligation
EXCEPTIONS:
1. when the obligation expressly stated that
there is solidarity
2. when the law requires solidarity
3. when the nature of the obligation requires
solidarity
4. when a charge or condition is imposed
upon heirs or legatees, and the testament
expressly makes the charge or condition
in solidum (Manresa)
5. When a solidary responsibility is imputed
by a final judgment upon several
defendants
Principal Effects of Joint Liability
1. Demand by one creditor upon one debtor,
produces the effects of default only with
respect to the creditor who demanded and
the debtor on whom the demand was
made, but not with respect to others
2. Interruption of prescription by the judicial
demand of one creditor upon a debtor,
does not benefit the other creditors nor
interrupt the prescription as to other
debtors
3. Vices of each obligation arising from the
personal defect of a particular debtor or
creditor does not affect the obligation or
right of the others
4. Insolvency of a debtor does not increase
the responsibility of his co-debtors, nor
does it authorize a creditor to demand
anything from his co-debtors
5. Defense of res judicata is not extended
from one debtor to another (Tolentino Vol. IV,
pp. 219-220)
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JOINT DIVISIBLE OBLIGATION (Art. 1208)
Each creditor can demand only for the payment of
his proportionate share of the credit, while each
debtor can be held liable only for the payment of
his proportionate share of the debt.
• Credit or debt shall be presumed to be divided
into as many equal shares as there are
creditors or debtors, the credits or debts
considered distinct from one another subject
to the Rules of Court governing multiplicity of
suits.
• Joint creditor cannot act in representation of
the others; neither can a joint debtor be
compelled to answer for the liability of others.
• In case of breach of obligation by one of the
debtors, damages due must be borne by him
alone; If there is any defense purely personal
to one of the debtors, he alone can avail
himself of such defense.
JOINT INDIVISIBLE OBLIGATION
(Art. 1209)
It retains two fundamental characteristics of a joint
obligation – i. no creditor can act in
representation of the other; ii. no debtor can
be compelled to answer for the liability of the
others.
Other characteristics of a joint indivisible
obligation includes the following:
1. if there are two or more debtors, the
fulfillment of or compliance with the
obligation requires the concurrence of all
the debtors, although each for his own
share
2. if there are two or more creditors, the
concurrence or collective act of all the
creditors, although each for his own share,
is also necessary for the enforcement of
the obligation
NOTES:
In case of breach where one of the joint debtors
fails to comply with his undertaking, the
obligation can no longer be fulfilled or
performed. Consequently, it is converted into
one of indemnity for damages.
In case of insolvency of one of the debtors, the
others shall not be liable for his shares. To
hold otherwise would destroy the joint
character of the obligation.
Interruption of period of prescription:
If there are two or more creditors or debtors,
will the claim of a creditor addressed to a
single debtor or the acknowledgement made
by one of the debtors in favor of one or more of
104 MEMORY AID IN CIVIL LAW
Obligations & Contracts

the creditors be sufficient to interrupt the period with respect to his share in the obligation,
of prescription? but in relation to the common creditor/
s, represent all of the other debtors.
Two views:
Its fundamental effect is the liability of each
1. Art. 1209 merely provides that the right of
debtor for the payment of the entire
the creditors may be prejudiced only by
obligation, with consequent right to
their collective acts, it can therefore be
demand reimbursement from the
inferred that should the act of a joint
others.
creditor be per se beneficial to the
others, the act of one is sufficient 3. Mixed
(Manresa).
solidarity among creditors and debtors
2. The act of a joint creditor which would
NOTE: Solidarity is not destroyed by the fact that
ordinarily interrupt the period of
the obligation of each debtor is subject to different
prescription would not be valid because
conditions or periods. In such case, creditor can
the indivisible character of the obligation
commence an action against anyone of the
requires collective action of the creditors to
debtors for compliance with the entire obligation
be effective (Tolentino).
minus the portion or share which corresponds to
• According. to Jurado, it is submitted that the debtor affected by the condition or period.
the latter view is more logical.

EFFECTS OF PREJUDICIAL AND

INDIVISIBILITY AND SOLIDARITY BENEFICIAL ACTS (Art. 1212)
(Art. 1210)
• Each one of the solidary creditors may do
INDIVISIBILITY AND SOLIDARITY DISTINGUISHED whatever may be useful or beneficial to the
others, but not anything which may be
INDIVISIBILITY SOLIDARITY prejudicial to the latter.
1. refers to the 1. refers to the legal tie • However, as far as the debtor/s is/are
prestation which or vinculum, and concerned, a prejudicial act performed by a
constitutes the object of consequently to the solidary creditor is binding; as between the
the obligation subjects or parties of the solidary creditors, the creditor who
obligation performed such act shall incur the obligation
2. plurality of subjects 2. plurality of subjects is of indemnifying the others for damages
is not required indispensable (Castan).
3. in case of breach, 3. when there is liability
obligation is converted on the part of the EFFECTS OF ASSIGNMENT OF RIGHTS
into one of indemnity debtors because of the IN SOLIDARY OBLIGATION (Art. 1213)
for damages because breach, the solidarity
the indivisibility of the among the debtors GENERAL RULE: A solidary creditor cannot
obligation is terminated remains assign his right because it is predicated
upon mutual confidence meaning personal
SOLIDARITY (Art. 1211) qualification of each creditor had been taken
into consideration when obligation was
Solidarity may exist although creditors and
constituted.
debtors may not be bound in the same manner
and by the same periods and conditions. EXCEPTIONS:
Kinds of solidarity 1. Assignment to co-creditor
1. Active (solidarity among creditors) 2. Assignment is with consent of co-creditor
A tie/vinculum by virtue of which each of
them, in relation to his co-creditor, TO WHOM PAYMENT MUST BE MADE IN
possesses the character of creditor only SOLIDARY OBLIGATION (Art. 1214)
with respect to his share in the obligation,
but in relation to the common debtor/s, GENERAL RULE: Payment may be made to any
represent all of the other creditors. of the solidary creditors
Its fundamental effect is the creation of a EXCEPTION: If demand, judicial or extra-judicial,
relationship of mutual agency among has been made by one of them, payment
them. should be made to him.
2. Passive (solidarity among debtors)
A tie/vinculum by virtue of which each of
them, in relation to his co-debtors,
possesses the character of debtor only
San Beda College of Law
EFFECT OF N O VAT I O N ,
COMPENSATION AND CONFUSION,
AND REMISSION IN SOLIDARY
OBLIGATION (Art. 1215, Arts. 1219-1220)
NOVATION
1. If it is prejudicial, the solidary creditor
who effected the novation shall reimburse
the others for damages incurred by them;
2. If it is beneficial and the creditor who
effected the novation is able to secure
performance of the obligation, such
creditor shall be liable to the others for
the share which corresponds to them, not
only in the obligation, but also in the
benefits;
3. If it is effected by substituting another
person in place of the debtor, the solidary
creditor who effected the novation is liable
for the acts of the new debtor in case
there is deficiency in performance or in
case damages are incurred by the other
solidary creditors as a result of the
substitution;
4. If it is effected by subrogating a third
person in the rights of the solidary creditor
responsible for the novation, the
obligation of the debtor or creditors is
not in reality extinguished, because the
relation between the other creditors not
substituted and the debtor/s is maintained.
COMPENSATION AND CONFUSION
1. If the confusion or compensation is
partial, the rules regarding application of
payment shall apply. This is without
prejudice to the right of other creditors
who have not caused the confusion or
compensation to be reimbursed to the
extent that their rights are diminished or
affected;
2. If the confusion or compensation is total,
the obligation is extinguished, what is left
is the ensuing liability for
reimbursement within each group – the
creditor causing the confusion or
compensation is obliged to reimburse the
other creditors; the debtors benefited by
the extinguishments of the obligation are
obliged to reimburse the debtor who made
the confusion or compensation possible.
IN REMISSION
1. If it covers the entire obligation,
obligation is totally extinguished;
2. If it is for the benefit of one of the debtors
covering his entire share, he is
completely released from the creditor/s
3. If it is for the benefit of one of the debtors
and it covers only part of his share, his
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character as a solidary debtor is not
affected
EFFECT OF DEATH OF PRINCIPAL DEBTOR
Under the law and jurisprudence, the creditor may
sue, separately or together, the principal debtor
and the surety, in view of the solidary nature of
their liability. The death of the principal debtor will
not work to convert, decrease or nullify the
substantive right of the solidary creditor. Evidently,
despite the death of the principal debtor, the
creditor may still sue the surety alone, in
accordance with the solidary nature of the latter’s
liability under the performance bond (Stronghold
Insurance Co. v. Republic – Asahi Glass Corp., G.R. No.
147561, June 22, 2006).
EFFECT OF DEMAND UPON A
SOLIDARY DEBTOR (Art. 1216)
• The demand made against one of them shall
not be an obstacle to those which may
subsequently be directed against the others
so long as the debt has not been fully
collected.
• The creditor may proceed against any one of
the solidary debtors or against all of them
simultaneously.
• A creditor’s right to proceed against the surety
exist independently of his right to proceed
against the principal.
EFFECT OF PAYMENT BY A DEBTOR
(Art. 1217 and Art. 1218)
• Payment made by one of the solidary debtors
extinguishes the obligation.
• If two or more solidary debtors offer to pay,
the creditor may choose which offer to accept.
• The solidary debtor who made the payment
shall have the right to claim from his co-
debtors the share which corresponds to them
with interest. However, this right is not
available if made after the obligation has
prescribed or has become illegal. If payment
was made before the debt became due, no
interest during the intervening period may be
demanded.
• When one of the solidary debtors cannot
reimburse his share to the debtor paying the
obligation due to insolvency, such share shall
be borne by all his co-debtors, in
proportion to the debt of each.
106
Obligations & Contracts
EFFECT OF LOSS OR IMPOSSIBILITY
OF PERFORMANCE IN SOLIDARY
OBLIGATION (Art. 1221)
1. If it is not due to the fault of the solidary
debtors, the obligation is extinguished.
2. If the loss or impossibility is due to the fault of
one of the solidary debtors OR due to a
fortuitous event after one of the solidary
debtors had already incurred in delay, the
obligation is converted into an obligation of
indemnity for damages but the solidary
character of the obligation remains.
D E F E N S E S AVA I L A B L E T O A
SOLIDARY DEBTOR (Art. 1222)
1. Defenses derived from the very nature of the
obligation
2. Defenses personal to him or pertaining to his
own share
3. Defenses personal to the others, but only as
regards that part of the debt for w/c the latter
are responsible
DIVISIBLE OBLIGATIONS
Those which have as their object a prestation
which is susceptible of partial performance
without the essence of obligation changed.
INDIVISIBLE OBLIGATIONS
Those which have as their object a prestation
which is not susceptible of partial performance,
otherwise, the essence of the obligation will be
changed
NOTES: Divisibility/ indivisibility of the obligation
refers to the performance of the prestation and not
to the thing which is the object thereof.
On the other hand, divisibility/indivisibility of the
thing refers to the prestation itself.
The true test of divisibility is whether the obligation
is susceptible of partial compliance or not.
(Art. 1225 par. 1).
In obligation to give, even though the object may
be physically divisible, the obligation is still
indivisible if it is provided by the law or it is so
intended by the parties (Art. 1225 par. 3).
EFFECT OF DIVISIBLE OR INDIVISIBLE
OBLIGATION (Art. 1223)
Divisibility/indivisibility is of little significance as
implied under Art. 1223
GENERAL RULE: Creditor cannot be compelled
partially to receive the prestation in which the
obligation consists; neither may the debtor be
required to make partial payments
MEMORY AID IN CIVIL LAW
EXCEPTIONS:
1. When the obligation expressly stipulates
the contrary
2. When the different prestations constituting
the objects of the obligation are subject to
different terms and conditions
3. When the obligation is in part liquidated
and in part unliquidated
NOTE: When there is plurality of debtors and
creditors, the effect of divisibility/indivisibility
character of the obligation depend upon whether
the obligation is joint or solidary.
# IF solidary – Arts. 1211 to Art. 1222 apply
# IF joint divisible – Art. 1208 is applicable
# IF joint indivisible – Art. 1209 and 1224
apply
BREACH OF JOINT INDIVISIBLE
OBLIGATION (Art. 1224)
Obligation can be enforced only by proceeding
against all of the debtors.
If anyone of the debtors should fail or refuse to
comply with the obligation, it is converted into
one of indemnity for damages. However, the
debtors who may have been ready to comply
with what is incumbent upon them shall not
contribute to the indemnity beyond the
corresponding portion of the price of the thing
or the value of the service in which the
obligation consists.
The debtor who failed or refused to comply with
the prestation shall bear the burden of
paying all of the damages to the creditor/s.
If other debtors also suffered damages as a result
of the transformation of the obligation into one
of indemnity, they may also recover such
damages from the debtor who was at fault.
OBLIGATION WITH A PENAL
CLAUSE
One to which an accessory undertaking is
attached for the purpose of insuring its
performance by virtue of which the obligor is
bound to pay a stipulated indemnity or perform
a stipulated prestation in case of breach.
Purpose of penalty:
1. Función coercitiva o de garantia - to insure
the performance of the obligation;
2. Función liquidatoria - to liquidate the
amount of damages to be awarded to the
injured party in case of breach of the
principal obligation (compensatory);
3. Función estrictamente penal - in certain
exceptional cases, to punish the obligor in
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case of breach of the principal obligation satisfaction of the penalty at the same time
(punitive). unless the right has been clearly granted to
him (Art. 1227). From this, it can be inferred
Kinds of penalty:
that a tacit/implied grant is admissible.
1. As to origin • If creditor has chosen fulfillment of the
a. Legal – constituted by law principal obligation and performance thereof
b. Conventional – constituted by parties become impossible without his fault, he may
still demand satisfaction of the penalty.
2. As to purpose
• If there was fault on the part of debtor,
a. Compensatory – indemnity for creditor may demand not only satisfaction of
damages penalty but also the payment of damages.
b. Punitive – punishment for breach • If creditor chooses to demand the satisfaction
3. As to effect of the penalty, he cannot afterwards demand
fulfillment of the obligation.
a. Subsidiary – only penalty may be
demanded
b. Joint – both penalty and principal PROOF OF ACTUAL DAMAGES
obligation may be demanded (Art. 1228)

The rule that proof of actual damages is not

EFFECT OF PENALTY (Art. 1226)
GENERAL RULE: The penalty shall substitute
the indemnity for damages and payment of
interest in case of noncompliance
EXCEPTIONS:
1. when there is a stipulation to the contrary
2. when the obligor refuses to pay the
penalty
3. when the obligor is guilty of fraud
necessary is applicable only to the general
rule stated in Art. 1226 and not to the
exceptions.
Hence, in this sense, the penalty is exactly
identical with what is known as “liquidated
damages” under Art. 2226.
WHEN PENALTY MAY BE REDUCED (Art.
1229)
1. If the principal obligation has been partly
complied with;

LIMITATION UPON THE RIGHT OF THE
DEBTOR IN OBLIGATION WITH A
PENAL CLAUSE (Art. 1227)
Debtor cannot exempt himself from the
performance of the principal obligation by paying
the stipulated penalty unless this right has been
expressly reserved for him.
LIMITATION UPON THE RIGHT OF THE
CREDITOR IN OBLIGATION WITH A
PENAL CLAUSE (Art. 1227)
• Creditor cannot demand the fulfillment of the
principal obligation and demanding the
2. If the principal obligation has been irregularly
complied with; and
3. If the penalty is iniquitous or unconscionable
even if there has been no performance.
NOTE: If principal obligation is void, penal clause
shall also be void (Art. 1230).
Reason: Penalty is merely an accessory
obligation.
" If penal clause is void, principal obligation is
not affected (Art. 1230).

Modes of Extinguishing Obligations (Art. 1231)

a. Payment/performance h. Rescission
b. Loss of the thing due i. Fulfillment of a resolutory condition
c. Condonation or remission of debt j. Prescription
d. Confusion or merger NOTE: Enumeration under Art. 1231 is not
complete.
e. Compensation
f. Novation
g. Annulment
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Obligations & Contracts
PAYMENT OR PERFORMANCE
(Art. 1232)
Means not only the delivery of money but also the
performance, in any other manner, of an
obligation.
CHARACTERISTICS OF PAYMENT:
a. Identity – only the prestation agreed upon
and no other must be complied with
b. Completeness – the thing or service must
be completely delivered or rendered
c. Indivisibility – payment or performance
must be indivisible.
NOTE: As a general rule, the following
characteristics must concur.
PRINCIPLE OF INTEGRITY (Art. 1233)
GENERAL RULE: A debt shall not be understood
to have been paid unless the thing or service
in which the obligation consists has been
completely delivered or rendered, as the case
may be (Art. 1232).
EXCEPTIONS:
1. When the obligation has been
substantially performed in good faith (Art.
1234).
2. When the obligee accepts performance,
knowing its incompleteness or irregularity
and without expressing any protest or
objection. This is based on the principle of
estoppel (Art. 1235).
Persons who may pay the obligation:
1. the debtor himself or his legal
representative
2. any third person
RIGHT OF CREDITOR (Art. 1236)
GENERAL RULE: Creditor is not bound to accept
payment or performance by a third person
EXCEPTIONS:
1. Third person is interested in the fulfillment
of the obligation
2. There is stipulation
Rights of third person who paid the obligation:
1. If payment was made with knowledge and
consent of the debtor:
a. can recover entire amount paid
b. can be subrogated to all the rights of the
creditor (Art. 1237).
2. If payment was made without knowledge or
against the will of the debtor, he can
recover only insofar as the payment has been
beneficial to the debtor
MEMORY AID IN CIVIL LAW
NOTE: If payment was made by a third person
who does not intend to be reimbursed by the
debtor, the presumption arises that such
payment is donation. Therefore the debtor’s
consent is necessary. If consent is not secured,
rules stated in Arts. 1236 and 1237 shall apply but
as far as the creditor who accepted it, payment is
valid.
The person who pays the obligation should have
the necessary legal capacity to effect such
payment. Hence, payment must be made by
the one has the free disposal of the thing due
and capacity to alienate it (Art. 1239).
TO WHOM PAYMENT MUST BE MADE
(Art. 1240)
1. The person in whose favor the obligation has
been constituted
2. His successor in interest
3. Any person authorized to receive it
Effect of payment to unauthorized persons in
obligation to give:
GENERAL RULE: If payment is made to a person
other than those enumerated, it shall not be
valid.
EXCEPTIONS:
1. Payment made to a third person, provided
that it has redounded to the benefit of the
creditor.
Such benefit to the creditor is presumed
in the following cases (Art. 1241):
• If after the payment, the third person
acquires the creditor’s rights
(Subrogation);
• If the creditor ratifies the payment to the
third person (Ratification);
• If by the creditor’s conduct, the debtor has
been led to believe that the third person
had authority to receive the payment
(Estoppel).
2. Payment made to the possessor of the credit,
provided that it was made in good faith (Art.
1242).
NOTE: In obligation to give, payment to
incapacitated person is valid on the following
instances (Art. 1241):
a. when the incapacitated has kept the
b. amount or thing paid or delivered
c. when payment has been beneficial to the
incapacitated person
Payment made to the creditor by the debtor after
the latter has been judicially ordered to retain
the debt shall not be valid (Art. 1243).
San Beda College of Law
Unless otherwise stipulated, extrajudicial
expenses required by the payment shall be for
the account of the debtor (Art. 1247).
RULE IN MONETARY OBLIGATIONS
(Art. 1249)
1. In payment of debts in money, it must be
made in the currency stipulated. If it is not
possible to deliver such currency, then in the
currency which is legal tender in the
Philippines.
2. Delivery of promissory notes payable to order
or bills of exchange or other mercantile
documents shall not produce the effect of
payment except:
a. when they have been cashed; or
b. when through the fault of the creditor they
have been impaired
NOTE: The impairment of the negotiable
instrument through the fault of the creditor
contemplated by Art. 1249 is applicable only to a
document executed by a third person and
delivered by the debtor to the creditor.
LEGAL TENDER
Such currency which may be used for the
payment of all debts, whether private or public.
Legal tender in the Philippines would be all notes
and coins issued by the Bangko Senral.
Circular No. 537:
1. 1,000 for denominations of 1-Piso, 5-Piso
and 10-Piso
2. 100 for denominations of 1-sentimo, 5-
sentimo, 10-sentimo and 25-sentimo.
R.A. 8183 provides that all monetary obligations
shall be settled in the Philippine currency
which is legal tender in the Philippines.
However, the parties may agree that the
obligation or transaction be settled in other
currency at the time of payment.
E X T R A O R D I N A RY I N F L AT I O N O R
DEFLATION (Art. 1250)
Requisites:
1. There must be a decrease or increase in
the purchasing power of the currency
which is unusual or beyond the common
fluctuation in the value of the currency;
2. such decrease or increase could not
have reasonably foreseen or which was
manifestly beyond their contemplation
of the parties at the time when the
obligation was established.
" Applies only to contractual obligations
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2008 CENTRALIZED BAR OPERATIONS
NOTE: Even if the price index of the goods and
services may have risen during the intervening
period (Sangrador v. Valderrama, GR No. 79552, November
29, 1988), this increase, without more, cannot be
considered as resulting in “extraordinary inflation”
as to justify the application of Article 1250 (Telengtan
& Sons, Inc. v. United States Lines, Inc., et. al., G.R. No.
132284, February 28, 2006).
There must be a declaration of such
extraordinary inflation or deflation by the
Bangko Sentral. Without such declaration, the
creditors cannot demand an increase, and debtors
a decrease, of what is due to or from them (Ramos
v. CA, GR No. 119872, July 7, 1997 and Mobil Oil Phils. v.
CA, GR No. 103072, August 20, 1993).
PLACE OF PAYMENT (Art. 1251)
1. In the place stipulated by the parties.
2. If there is no stipulation and the obligation is
to deliver a determinate thing, payment shall
be made at the place where the thing might
be at the time the obligation was constituted.
3. In any other case, the payment shall be made
at the domicile of the debtor.
NOTES: If the debtor changes his domicile in bad
faith or after he has incurred in delay, the
additional expenses shall be borne by him.
Art. 1251 is intended to govern unilateral
obligations. Reciprocal obligations are governed
by special rules.
SPECIAL FORMS OF PAYMENT:
a. Application of payment
b. Dation in payment
c. Payment by cession
d. Tender of payment and consignation
A.
APPLICATION OF PAYMENT
Designation of the debt to which the payment
must be applied when the debtor has several
obligations of the same kind in favor of the
same creditor.
Requisites:
a. There must be only one debtor and only
one creditor;
b. there must be two or more debts of the
same kind;
c. all of the debts must be due except if there
is stipulation to the contrary OR
application of payment is made by the
party for whose benefit the term has been
constituted; and
110 MEMORY AID IN CIVIL LAW
Obligations & Contracts

d. the amount paid by the debtor must not be b. partial or relative insolvency of the debtor;
sufficient to cover the total amount of all and
the debts.
c. acceptance of the cession by the creditors.
Rules on Application of Payment
Kinds of Payment by Cession
1. The right to designate the debt to which
1. Contractual (Article 1255)
payment shall be applied belongs primarily
to the debtor (Art. 1252, par. 1). 2. Judicial (governed by Insolvency Law)
2. If right to designate is not exercised by the a. Voluntary
debtor at the time when payment is b. Involuntary
made, such right is extinguished and the
application would then be governed by Art.
1254 unless the creditor in the meantime, DATION IN PAYMENT AND PAYMENT BY CESSION
makes the application by giving the debtor, DISTINGUISHED
who accepts it, a receipt in which
application of the payment is made. Note PAYMENT BY
DATION IN PAYMENT
that what the creditor does is to propose CESSION
the application of payment subject to the
one creditor plurality of creditors
express or tacit approval of the debtor.
3. If the debt produces interests, payment of not necessarily in state of debtor must be
the principal shall not be deemed to have financial difficulty partially or relatively
been made until the interests have been insolvent
covered (Art. 1253). Said provision thing delivered is universality of
applies only in the absence of an considered as equivalent property of debtor is
agreement to the contrary. In other of performance what is ceded
words, it is merely directory and not payment extinguishes merely releases
mandatory. obligation to the extent of debtor for net
4. When payment cannot be applied in the value of the thing proceeds of things
accordance with Art. 1252 or if the delivered as agreed upon, ceded or assigned,
application cannot be inferred from other proved or implied from the unless there is
circumstances, the debt which is most conduct of the creditor contrary intention
onerous to the debtor, among those due,
shall be deemed to have been satisfied
(Art. 1254). D.
TENDER OF PAYMENT AND CONSIGNATION
(Art. 1256)
B.
DATION IN PAYMENT (DACION EN PAGO)
Delivery and transmission of ownership of a thing TENDER OF PAYMENT
by the debtor to the creditor as an accepted Consists in the manifestation of the debtor to the
equivalent of the performance of the obligation. creditor of his decision to comply immediately with
Requisites: his obligation.

a. Existence of a money obligation; It is the preparatory act and extrajudicial in

character.
b. alienation to the creditor of a property by
the debtor with the consent of the former;
and CONSIGNATION
c. satisfaction of the money obligation of the Refers to the deposit of the object of the
debtor. obligation in a competent court in accordance
with the rules prescribed by law, after refusal
or inability of the creditor to accept the
C. tender of payment.
PAYMENT BY CESSION (Art. 1255)
It is the principal act and judicial in character.
Special form of payment whereby the debtor
Special Requisites of Consignation:
abandons all of his property for the benefit of
his creditors in order that from the proceeds a. That there is a debt due;
thereof, the latter may obtain payment of their b. That consignation has been made either
credits. because the creditor to whom tender of
Requisites: payment was made refused to accept
the payment without just cause OR
a. Plurality of debts; because any of the causes stated by
San Beda College of Law
law for effective consignation without
previous tender of payment exists;
c. Previous notice of consignation to the
persons interested in the fulfillment of the
obligation;
d. That the thing or amount due had been
placed at the disposal of judicial
authority; and
e. That after the consignation has been
made, the persons interested in the
fulfillment of the obligation had been
notified thereof.
Instances where consignation shall produce
the effects of payment without prior tender of
payment (Art. 1259 par. 2):
1. creditor is absent or unknown, or does not
appear at the place of payment
2. creditor is incapacitated to receive the
payment at the time it is due
3. when without just cause, the creditor
refuses to give a receipt
4. when two or more persons claim the right
to collect
5. when the title of the obligation has been
lost
Effects of consignation:
1. If the creditor accepts the thing or amount
deposited without contesting the validity or
efficacy of the consignation, the obligation
is cancelled/extinguished.
2. If the creditor contests the validity or
efficacy of the consignation or if the
creditor is not interested or unknown or is
absent, the result is a litigation. If during
the trial, the plaintiff-debtor is able to
establish that all the requisites of
consignation has been complied with, the
obligation is extinguished.
Effects of withdrawal of the object/amount
deposited
1. Before creditor accepted consignation or
judicial declaration of consignation (Article 1260,
par. 2)
• Obligation remains in force
2. With consent of the creditor (Article 1261)
• Creditor loses every preference which he
may have over the thing
• Solidary co-debtors, guarantors and
sureties are released
NOTES: It is the consignation which constitutes a
form of payment and must follow, supplement or
complete the tender of payment in order to
discharge the obligation.
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2008 CENTRALIZED BAR OPERATIONS
A valid tender of payment has the effect of
exempting the debtor from payment of interest
and/or damages.
In case of exercise of right of repurchase by
tender of check, such tender is valid because it
is an exercise of a right and not made as mode
of payment of an obligation. Article 1249 is not
applicable.
The expenses of consignation, when properly
made, shall be charged against the creditor
(Art. 1259).
LOSS OF THE THING DUE
EFFECTS OF LOSS IN DETERMINATE
OBLIGATION TO GIVE (Art. 1262)
Obligation is extinguished if the thing should be
lost or destroyed without the fault of the debtor
and before he has incurred in delay.
GENERAL RULE: Loss of a determinate thing
through fortuitous event shall extinguish the
obligation.
EXCEPTIONS:
1. when by law, obligor is liable even for
fortuitous event;
2. when by stipulation, obligor is liable even
for fortuitous event;
3. when the nature of the obligation requires
the assumption of risk;
4. when the loss of the thing is due partly to
the fault of the debtor;
5. when the loss of the thing occurs after the
debtor incurred in delay;
6. when the debtor promised to deliver the
same thing to two or more persons who
do not have the same interest; and
7. when the debt of a certain and
determinate thing proceeds from a
criminal offense
8. when the obligation is generic
EFFECT OF LOSS IN GENERIC
OBLIGATIONS TO GIVE (Art. 1263)
GENERAL RULE: Obligation is not extinguished
based upon the principle that the genus of a
thing cannot perish.
EXCEPTION:
In case of a generic obligation whose object is
a particular class or group with specific or
determinate qualities.
112
Obligations & Contracts
EFFECT OF PARTIAL LOSS (Art. 1264)
GENERAL RULE: Partial loss does not extinguish
the obligation.
EXCEPTION:
When the partial loss or destruction of the
thing is of such importance that would be
tantamount to a complete loss or destruction.
RULE IF THE THING IS IN DEBTOR’S
POSSESSION (Art. 1265)
GENERAL RULE: Whenever a thing is lost in the
possession of the debtor, it shall be
presumed that the loss was due to his fault,
unless there is proof to the contrary.
EXCEPTIONS:
No such presumption in case of:
1. earthquake;
2. flood;
3. storm;
4. other natural calamity
EFFECT OF IMPOSSIBILITY OF
PERFORMANCE IN OBLIGATION TO DO
(Art. 1266)
When the obligation becomes legally or physically
impossible without the fault of the debtor, obligor
is released from the obligation.
EFFECT OF RELATIVE IMPOSSIBILITY
DOCTRINE OF UNFORESEEN EVENTS (Art. 1267)
When the service has become so difficult as to be
manifestly beyond the contemplation of the
parties, the court should be authorized to release
the obligor in whole or in part.
• The intention of the parties should govern and
if it appears that the service turns out to be so
difficult as to have been beyond their
contemplation, it would be doing violence to
the intention to hold the obligor still
responsible.
• It is not a requirement under Art. 1267 that the
contract be for future service with future
unusual change.
PRINCIPLE OF SUBJECTIVE IMPOSSIBILITY
When there is no physical or legal loss but the
thing object of the obligation belongs to another,
the performance by the debtor of the obligation
undoubtedly becomes impossible. Failure of
performance is imputable to the debtor. Thus, the
debtor must indemnify the creditor for the
damages suffered by the latter (Tolentino, Volume IV,
p. 336).
MEMORY AID IN CIVIL LAW
EFFECT OF LOSS ON RECIPROCAL OBLIGATIONS
1. First view – If an obligation is extinguished by
the loss of the thing or impossibility of
performance through fortuitous events, the
counter-prestation is also extinguished. The
debtor is released from liability but he cannot
demand the prestation which has been
stipulated for his benefit. He who gives
nothing has no reason to demand anything
(Tolentino, Volume IV, pp. 337-338).
2. Second View – The loss or impossibility of
performance must be due to the fault of the
debtor. In this case, the injured party may ask
for rescission under Article 1191 plus
damages. If the loss or impossibility was due
to a fortuitous event, the other party is still
obliged to give the prestation due to the other
(J.B.L. Reyes).
RULE IF OBLIGATION ARISES FROM
CRIMINAL OFFENSE (Art. 1268)
GENERAL RULE: Debtor shall not be exempted
from the payment of the price whatever may
be the cause for the loss.
EXCEPTION: When the thing having been offered
by the debtor to the person who should
receive it, the latter refused without
justification.
NOTE: The offer referred in Art. 1268 should not
be confused with consignation inasmuch as the
latter refers only to the payment of the obligation,
while the former refers to the extinguishment of
the obligation through loss by fortuitous event.
CONDONATION OR REMISSION
OF THE DEBT
An act of liberality by virtue of which the obligee,
without receiving any price or equivalent,
renounces the enforcement of the obligation,
as a result of which it is extinguished in its
entirety or in that part or aspect of the same to
which the remission refers.
It is the gratuitous abandonment by the creditor of
his right.
Requisites of remission:
a. It must be gratuitous;
b. It must be accepted by the obligor; and
c. The obligation must be demandable.
Kinds of remission:
1. As to form
i. express – when made in accordance
with the formalities prescribed by law for
donations
ii. implied - when it can be deduced from
the acts of the obligee
San Beda College of Law 113
2008 CENTRALIZED BAR OPERATIONS

2. As to extent EFFECTS OF CONFUSION/ MERGER

i. total – entire obligation is extinguished (Arts. 1276-1277)

ii. partial – refers only to the principal or 1. If confusion take place in the person of either
accessory obligation or to an aspect principal creditor or principal debtor –
thereof which affects the debtor extinguishment of entire obligation
3. As to constitution 2. If confusion take place in the person of a
subsidiary creditor or subsidiary debtor (e.g.
i. inter vivos – constituted by agreement of
guarantor) – no extinguishment of principal
the obligee and obligor
obligation; only substitution of creditor or
ii. mortis causa – constituted by last will debtor
and testament
3. If confusion takes place in one of the joint
NOTES: Whether express or implied, the extent of debtors – principal obligation is extinguished
remission or condonation shall be governed by the up to the share which corresponds to him
rules regarding inofficious donation.
4. If confusion takes place in one of the solidary
If the creditor voluntarily delivers the private debtors – entire obligation is extinguished.
document evidencing the credit to the debtor,
there is a presumption that he renounces
his right of action against the latter for the COMPENSATION
collection of the said credit (Art. 1271).
Moreover, when such private document is Mode of extinguishing in the concurrent amount of
found in possession of the debtor, it shall be the obligation of those persons who are
presumed that the creditor delivered it reciprocally debtors and creditors of each other.
voluntarily, unless the contrary is proved (Art.
1272).
COMPENSATION AND CONFUSION DISTINGUISHED
If the remission refers to the principal obligation,
all the accessory obligations are extinguished. Compensation Confusion
However, if remission refers only to the two persons who, in only one person in
accessory obligation, the principal obligation their own right, are whom the qualities of
continues to subsist (Art. 1273). creditors and debtors of debtor and creditor are
each other merged
there must be at least there is only one
CONFUSION two obligations obligation
It is the merger of the characters of the creditor
and the debtor in one and the same person by COMPENSATION AND PAYMENT DISTINGUISHED
virtue of which the obligation is extinguished.
Compensation Payment
Requisites of Merger 1. the requisites prescribed by law for
a. That the merger of the characters of the compensation are different from those prescribed
creditor and debtor must be in the same by law for payment.
person; 2. takes effect by 2. takes effect by act of
b. That it must take place in the person of either operation of law the parties
the principal creditor or the principal debtor; 3. capacity to give and to 3. capacity to give and
and acquire is not necessary to acquire is essential
c. It must be complete and definite
4. as a rule, it is partial 4. as a rule, complete
NOTE: The requisite that the merger of right of and indivisible
creditor and debtor must be complete and definite
does not mean that the extinguishment of the COMPENSATION AND COUNTERCLAIM DISTINGUISHED
obligation should be complete or total in character;
it merely means that whether the merger refers to Compensation Counterclaim
the entire obligation or only a part thereof, it must requires that two debts must Not necessary
be of such a character that there will be a consist in money or if fungibles,
complete and definite meeting of all the qualities same kind and quality
of creditor and debtor in the obligation or in the
as a rule, both debts must be does not require
part or aspect thereof which is affected by the
liquidated that debts be
merger.
liquidated
need not be pleaded must be pleaded
to be effectual
114
Obligations & Contracts
Kinds of Compensation:
A. As to cause
a. Legal – takes effect by operation of law
b. Voluntary – agreed upon by the parties
c. Judicial – takes effect by judicial decree
d. Facultative – when it can be claimed by
one of the parties who, however, has the
right to object to it
B. As to effect
a. Total – debts to be compensated are
equal in amount
b. Partial – debts to be compensated are
not equal in amount
REQUISITES OF COMPENSATION
(Art. 1279)
1. There must be two parties, who, in their own
right, are principal creditors and principal
debtors of each other except in case of
guarantor (Article 1280);
2. Both debts must consist in sum of money, or if
the things due are fungibles (consumables),
they must be of the same kind and quality;
3. Both debts must be due;
4. Both debts must be liquidated and
demandable;
5. There must be no retention or controversy
commenced by third persons over either of
the debts and communicated in due time to
the debtor;
6. The compensation must not be prohibited by
law
RIGHT OF GUARANTOR TO SET-UP
COMPENSATION (Art. 1280)
The guarantor, in case the payment of the debt is
demanded from him, may set up compensation,
not only for what such creditor owes him, but also
for what such creditor owes the principal debtor
RULES IN CASE OF RESCISSIBLE OR
VOIDABLE DEBTS (Art. 1284)
Rescissible or voidable obligations may be
compensated against each other before they are
judicially rescinded or avoided.
EFFECTS OF ASSIGNMENT OF RIGHTS
(Art. 1285)
1. if with consent of debtor – debtor cannot set-
up compensation unless he reserved his right
to compensation.
MEMORY AID IN CIVIL LAW
2. If with knowledge but without consent of
debtor – debtor may set-up compensation
prior to the assignment but not subsequent
ones
3. If without knowledge of the debtor – may set-
up compensation of all credits which he may
have against the assignor and which may
have become demandable, before he was
notified of the assignment.
DEBTS WHICH CANNOT BE COMPENSATED
(Art. 1286-1287):
1. debts arising from contracts of depositum
2. debts arising from contracts of commodatum
3. claims for support due by gratuitous title
4. obligations arising from criminal offenses
5. certain obligations in favor of government
(e.g. taxes, fees, duties, and others of a
similar nature).
FACULTATIVE COMPENSATION
This is compensation which can be set up only at
t h e o p t i o n o f t h e c r e d i t o r, w h e n l e g a l
compensation cannot take place because of want
of some legal requisites for the benefit of the
creditor. The latter can renounce his right to
oppose the compensation and he himself can set
it up. It differs from conventional compensation
because it is unilateral while the latter depends
upon the agreement of both parties (Tolentino, Volume
IV, p. 367).
NOVATION
It is the substitution or change of an obligation by
another, resulting in its extinguishment or
modification, either by changing its object or
principal conditions, or by substituting another
in place of the debtor, or by subrogating a third
person in the rights of the creditor.
Requisites of Novation
a. A previous valid obligation;
b. Agreement of the parties to the new
obligation;
c. Extinguishment of the old obligation; and
d. Validity of the new obligation.
Two-fold Purpose of Novation
1. Original obligation is extinguished
2. A new obligation is created
Kinds of Novation
1. As to its essence
a. Objective/Real - refers to the change
either in the cause, object or principal
conditions of the obligations
San Beda College of Law
b. Subjective/Personal - refers to the
substitution of the person of the
debtor or to the subrogation of a third
person in the rights of the creditor
c. Mixed
2. As to its form/constitution
a. Express - when it is declared in
unequivocal terms that the old
obligation is extinguished by a new
one which substitutes the same.
b. Implied - when the old and new
obligations are incompatible with
each other on every point.
TEST OF INCOMPATIBILITY
Whether or not the old and new obligations can
stand together, each having its own independent
existence. If they can stand together, there is no
incompatibility; consequently, there is no novation.
I f t h e y c a n n o t s t a n d t o g e t h e r, t h e r e i s
incompatibility; consequently, there is novation.
OBJECTIVE NOVATION (Art. 1291, par.1)
According to Castan objective novation is effected
by:
1. Changing the cause of the obligation
2. Changing the object of the obligation
3. Changing the principal or essential conditions
of the obligation.
NOTE: A change in the rate of interest was merely
collateral agreement between the creditor and
principal debtor that did not affect the surety. The
agreement to pay the additional interest was an
additional burden upon him (the debtor who
consents) and him only. It did not in anyway
affected the original contract. Thus, despite the
compounding of the interest, the liability of the
surety remains only up to the original
uncompounded interest (Garcia, Jr. v. CA, 191 SCRA
493).
NOVATION BY SUBSTITUTION OF
DEBTORS (Art. 1293):
This type of substitution is a subjective/personal
novation consists in the substitution of a new
debtor in place of the original debtor.
Forms of novation by substitution of debtors:
1. Expromisión – if effected with the consent
of the creditor at the instance of the new
debtor even without the consent or even
against the will of the old debtor.
Requisites:
a. Initiative for substitution must
emanate from the new debtor; and
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2008 CENTRALIZED BAR OPERATIONS
b. Consent of the creditor to the
substitution.
Kinds of Substitution by Expromisión
a. Substitution with the knowledge
and consent of the old debtor; and
b. Substitution without the knowledge
or against the will of the old debtor.
2. Delegación – if effected with the consent
of the creditor at the instance of the old
debtor (delegante), with the concurrence
of the new debtor (delegado).
Requisites:
a. Initiative for substitution must emanate
from the old debtor;
b. Consent of the new debtor; and
c. Acceptance by the creditor.
Effect of Payment by New Debtor:
A. Expromisión
If substitution was effected with the
knowledge and consent of the original
debtor, and payment is made by the new
debtor with or without the knowledge
and consent of such original debtor – the
new debtor can demand reimbursement
from the original debtor of the entire
amount which he has paid, and at the
same time , be subrogated in all the
rights of the creditor.
If substitution was effected without the
knowledge and consent of the original
debtor, and payment is made by the new
debtor without the knowledge and
consent of the original debtor - the new
debtor can demand reimbursement
from the original debtor only insofar as
the payment has been beneficial to such
debtor, but he cannot be subrogated in
the rights of the creditor.
B. Delegación – Since substitution was effected
with the consent of all the parties, the new
debtor can demand reimbursement from the
original debtor of the entire amount which he
has paid as well as compel the creditor to
subrogate him to all of his rights.
NOTE: The mere fact that the creditor receives a
guaranty or accepts payment from a third person
who agrees to assume the obligation, when there
is no agreement that the first debtor shall be
released from responsibility, does not constitute
novation, and the creditor can still enforce the
obligation against the original debtor. If the older
debtor is not released, there is no novation; the
third person becomes merely a co-debtor, surety
or co-surety (Mercantile Insurance Co., Inc. v. CA, GR No.
85647, April 22, 1991).
116 MEMORY AID IN CIVIL LAW
Obligations & Contracts

EFFECT OF INSOLVENCY OR NON- If only the condition affecting the new

FULFILLMENT BY NEW DEBTOR obligation is fulfilled - there is no
(Arts. 1294-1295) novation since the requisite of a
previous valid and effective obligation
1. Expromisión – would be lacking.
Accdg. to Tolentino: The new debtor’s b. If the conditions are incompatible – the
insolvency or non-fulfillment of the effect is to extinguish the old obligation so
obligation shall not revive the original that only the new obligation remains and
debtor’s liability to the creditor whether whose demandability/effectivity depends
the substitution is effected with or without upon the fulfillment/non-fulfillment of the
the knowledge or against the will of the condition affecting it.
original debtor.
According to Jurado: If the substitution was NOVATION BY SUBROGATION
effected with the knowledge and consent (Art. 1300)
of the original debtor, the new debtor’s
insolvency or non-fulfillment of the A personal novation effected by subrogating a
obligation shall revive the original debtor’s third person in the rights of the creditor.
liability to the creditor.
Forms of novation by subrogation:
2. Delegación – The right of the creditor can no
1. Conventional – takes place by agreement
longer be revived except in the ff. cases:
of the original creditor, the third person
a. when the insolvency of the new debtor substituting the original creditor, and the
was already existing and of public debtor (Art. 1301).
knowledge at the time the when the
2. Legal – takes place by operation of law
original debtor delegated his debt;
b. when such insolvency was already
existing and known to the original debtor CONVENTIONAL SUBROGATION AND ASSIGNMENT OF
when he delegated his debt RIGHTS DISTINGUISHED
NOTE: A change in the incidental elements of, or CONVENTIONAL ASSIGNMENT OF
an addition of such elements to an obligation, SUBROGATION RIGHTS
unless otherwise expressed by the parties, will not
result in its extinguishment. 1. governed by Arts. 1. governed by Arts.
1300-1304 1624-1627
2. debtor’s consent 2. debtor’s consent is not
E F F E C T S O F N O VAT I O N U P O N is required required
ACCESSORY OBLIGATIONS (Art. 1296)
3. has the effect of 3. has the effect of
• When the principal obligation is extinguishing the transmitting the rights of
extinguished in consequence of a obligation and giving the creditor to another
novation, accessory obligation may subsist rise to a new one person without modifying/
only insofar as they may benefit third extinguishing the obligation
persons who did not give consent.
4. defects/ vices in 4. defects/ vices in the old
• Art. 1296 has no application to novation the old obligation are obligation are not cured
effected by subrogating a third person to cured
the rights of the creditor. Such novation is 5. the effects arises 5. as far as the debtor is
regulated by Arts. 1303-1304. from the moment of concerned, arises from the
Effects of condition in novation: novation/ moment of notification
subrogation
1. If the original obligation was subject to
suspensive/resolutory condition, the new
obligation shall be under the same condition,
LEGAL SUBROGATION (Art. 1302)
unless it is otherwise stipulated (Art. 1299).
2. If the new obligation and the old obligation are GENERAL RULE: Legal subrogation is not
subject to different conditions: presumed.

a. If the conditions can stand together - EXCEPTIONS:

If both are fulfilled - the new obligation 1. When a creditor pays another creditor who
becomes demandable is preferred, without debtor’s knowledge;

If only the condition affecting the old 2. When a third person, not interested in the
obligation is fulfilled - old obligation obligation, pays with the express or tacit
is revived while the new obligation approval of the debtor; or
loses its force.
San Beda College of Law
3. When, even without knowledge of the
debtor, a person interested in the
fulfillment of the obligation pays, without
prejudice to the effects of confusion as to
the latter’s share.
EFFECTS OR SUBROGATION
(Arts. 1303-1304)
1. In case of total subrogation -
It transfers to the person subrogated the
credit with all of the rights which the
original creditor had against the debtor or
third persons.
Hence, accessory obligations are not
extinguished because the person
Contracts
Contracts
A contract is a meeting of minds between two
persons whereby one binds himself, with respect
to the other, to give something or to render some
service.
Elements of contracts:
A. Essential – those without which there can
be no contract (Art. 1318).
a. Common elements
i. Consent
ii. Object or Subject Matter
iii. Cause or Consideration
b. Special elements – present only in
certain contracts, such as delivery in
real contracts
c. Extraordinary elements – peculiar to
specific contract, such as the price in
a contract of sale.
B. Natural – those which are derived from
the nature of the contract and ordinarily
accompany the same; they are presumed
by law, although they can be excluded by
the contracting parties if they so desire.
C. Accidental – those which exist only when
the parties expressly provide for them for
the purpose of limiting or modifying the
normal effects of the contract.
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subrogated also aquires all of the rights
which the original creditor had against
third persons. The rule is absolute with
respect to legal subrogation. In
conventional subrogation, accessory
obligations may be increased or reduced
upon agreement of the parties.
2. In case of partial subrogation –
A creditor, to whom partial payment has been
made, may exercise his right for the
remainder, and he shall be preferred to the
person who has been subrogated in his place
in virtue of the partial payment of the same
credit.
Contract (Art. 1305)
Classification of Contracts
A. According to their relation to other
contracts
a. Preparatory – preliminary step
towards the celebration of another
subsequent contract
b. Principal – can subsist independently
from other contracts
c. Accessory – can exist only as a
consequence of, or in relation with,
another prior contract
B. According to their perfection
a. Consensual – perfected by mere
agreement of the parties
b. Real – requires not only consent of
the parties for their perfection, but also
the delivery of the object
C. According to their form
a. Common or informal – those which
require no particular form
b. Special or formal – those which
require some particular form
D. According to their purpose
a. Transfer of ownership – e.g. sale
b. Conveyance of use – e.g.
commodatum
c. Rendition of service – e.g. agency
118
Obligations & Contracts
E. According to their subject matter
a. Things – e.g. sale, deposit, pledge
b. Services – e.g. agency, lease of
services
F. According to the nature of the vinculum
which they produce
a. Unilateral – e.g. commodatum,
gratuitous deposit
b. Bilateral – e.g. sale, lease
G. According to their cause
a. Onerous – e.g. sale
b. Gratuitous – e.g. commodatum
H. According to the risk involved
a. Commutative – e.g. lease
b. Aleatory – e.g. insurance
I. According to their names or norms
regulating them
a. Nominate – those which have their
own individuality and are regulated by
special provisions of law
b. Innominate – those which lack
individuality and are not regulated by
special provisions of law
Kinds of Innominate Contracts:
a. Do ut des - I give that you give
b. Do ut facias - I give that you do
c. Facio ut des - I do that you give
d. Facio ut facias - I do that you do
NOTE: Innominate contracts shall be regulated by
the stipulations of the parties, by the general
provisions of the Civil Code on obligations and
contracts, by rule governing the most analogous
nominate contracts and by the customs of the
place (Art. 1307).
According to some authorities, do ut des is no
longer an innominate contract. It has already been
given a name of its own, i.e. barter or exchange
(Article 1638).
AUTO-CONTRACT
A contract made by one person, acting in the
name of another in one capacity and in his own
name or that of a different person in another
capacity
• These contracts in our law are generally
accepted. The existence of a contract is not
determined by the number of persons who
intervened in it, but by the number of parties
thereto; not by the number of individual wills,
but by the number of declaration of wills
(Tolentino Vol. IV, p. 408).
MEMORY AID IN CIVIL LAW
COLLECTIVE CONTRACTS
Those where the law authorizes the will of the
majority to bind a minority to an agreement
notwithstanding the opposition of the latter.
CONTRACTS OF ADHESION
Contracts in which one of the parties imposes a
ready made form of contract, which the other party
may accept or reject, but which the latter cannot
modify (PCIB vs. CA. 255 SCRA 299).
CHARACTERISTICS OF CONTRACTS:
(OMARC)
a. Obligatory force of contracts
b. Mutuality
c. Autonomy
d. Relativity
e. Consensuality
OBLIGATORY FORCE OF CONTRACTS
The principle of the obligatory force of contracts is
explicitly recognized in Arts. 1159, 1308, 1315,
and 1356.
It refers to the rule that once the contract is
perfected, it shall be of obligatory force upon both
of the contracting parties.
MUTUALITY (Art. 1308)
The contract must bind both parties.
NOTES: The validity or fulfillment of a contract
cannot be left to the will of one of the contracting
paties. What is prohibited by the law from being
delegated to one of the contacting parties are:
(a) power to determine whether or not the
contract shall be valid, or
(b) to determine whether or not the contract
shall be fulfilled.
Validity or fulfillment may be left to the will of a
third person, whose decision shall not be
binding until it was made know to both the
contracting parties (Art. 1309).
Validity or fulfillment can be left to chance
Accdg. to Manresa, considering the text of Art.
1308, it is perfectly licit to leave the fulfillment
of a contract to the will of one of the
contracting parties in the negative form of
rescission, a case which is frequent in certain
contracts (especially in contracts of lease of
service), because in such case, neither is the
prohibition in the article violated nor is there
inequality between the parties since they
remain with the same faculties with respect to
fulfillment (Phil. Banking Corporation v. Lui She, G.R.
No. L-21422. December 18, 1967).
San Beda College of Law
AUTONOMY (Art. 1306)
The contracting parties may establish such
stipulations, clauses, terms and conditions as
they deem convenient.
Limitation to the principle of autonomy:
Such stipulation should not be contrary to law,
morals, good customs, public order, or public
policy.
RELATIVITY (Art. 1311)
GENERAL RULE: Contracts take effect only
between parties, their assigns and heirs.
However with respect to assignees or heirs,
the general rule under Art. 1311 is not
applicable if the rights and obligations arising
from the contract are not transmissible.
EXCEPTIONS:
1. Beneficial Stipulation/ Stipulation pour autrui -
A stipulation in favor of a third person.
Requisites:
a. There must be a stipulation in favor of
a third person;
b. The stipulation must be a part, not the
whole of the contract;
c. The contracting parties must have
clearly and deliberately conferred a
favor upon a third person, not a mere
incidental benefit or interest;
d. The third person must have
communicated his acceptance to the
obligor before its revocation; and
e. Neither of the contracting parties bears
the legal representative or
authorization of the third party.
Essential Requisites of Contract (COC)
1. CONSENT
2. OBJECT
3. CAUSE
CONSENT
Manifested by the meeting of the offer and the
acceptance upon the thing and the cause
which are to constitute the contract.
Requisites:
a. It must be manifested by the concurrence
of the offer and acceptance (Arts.
1319-1326);
b. The contracting parties must possess the
necessary legal capacity (Arts. 1327-1329);
and
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Test of Beneficial Stipulation:
Rely upon the intention of the parties as
disclosed by their contract. The test is
whether or not the parties deliberately
inserted terms in their agreement with the
avowed purpose of conferring a favor
upon such third person (Uy Tam v. Leonard,
GR No. 8312, March 29, 1915).
2. When the third persons comes into
possession of the object of a contract creating
real rights (Art. 1312).
3. Where the contract is entered into in order to
defraud a third person (Art. 1313);
4. Where the third person induces a contracting
party to violate his contract (Art. 1314).
Requisites:
a. The existence of a valid contract;
b. Knowledge on the part of the third person
of the existence of the contract; and
c. Interference by third person without legal
justification or excuse.
CONSENSUALITY OF CONTRACTS
(Art. 1315)
GENERAL RULE: Contracts are perfected by
mere consent and from that moment, the
parties are bound not only to the fulfillment of
what has been expressly stipulated but also to
all consequences which, according to their
nature may be in keeping with good faith,
usage and law.
EXCEPTION: Real contracts, such as deposit,
pledge and commodatum, are not perfected
until the delivery of the object of the
obligation.
c. It must be intelligent, free, spontaneous,
and real (Arts. 1330-1346).
OFFER
A proposal made by one party to another to
enter into a contract. The offer must be certain
or definite.
WITHDRAWAL OF OFFER
Offer/proposal may be withdrawn so long as
the offeror has no knowledge of acceptance by
offeree (Manresa, 5th Ed., Bk. 2, p. 373).
Rule on Complex offers
1. Offers are interrelated – contract is perfected
if all the offers are accepted.
120
Obligations & Contracts
2. O ff e r s a r e n o t i n t e r r e l a t e d – s i n g l e
acceptance of each offer results in a
perfected contract unless the offeror has
made it clear that one is dependent upon the
other and acceptance of both is necessary.
ACCEPTANCE
Must be certain or definite. Furthermore, it
must be absolute in character. A qualified
acceptance constitutes a counter-offer (Art.
1319).
An acceptance may be express or implied
(Art. 1320)
AMPLIFIED ACCEPTANCE
Under certain circumstances, a mere
amplification on the offer must be understood
as an acceptance of the original offer, plus a
n e w o ff e r w h i c h i s c o n t a i n e d i n t h e
amplification (Tolentino, Volume IV, p. 452).
WITHDRAWAL OF ACCEPTANCE
First View according to Manresa: “It is to be
observed that although the offeror is not
bound until he learns of the acceptance,
the same thing can not be said of the
offeree who, from the moment he
accepts, loses the power to retract such
acceptance since the right to withdraw
between the time of the acceptance and
its communication is a right which is
expressly limited by law to the offeror.
Undoubtedly, under this rule there would
exist a certain inequality between the
contracting parties during such interval;
but this is explained by the fact that since
the offeree is the first person who knows
of the concurrence of wills of the parties,
as a consequence, the obligation, as far
as he is concerned, must also commence
earlier.
Second View according to Tolentino:
Acceptance may be revoked before it
comes to the knowledge of the offeror
because in such case there is still no
m e e ting of the minds, since the
revocation has cancelled or nullified the
acceptance which thereby ceased to
have any legal effect.
NOTES: The offeror may fix the time, place, and
manner of acceptance, all of which must be
complied with (Art. 1321).
An offer made through agent is accepted from the
time acceptance is communicated to him.
(Article 1322)
An offer becomes ineffective upon the death, civil
interdiction, insanity or insolvency of either
party before acceptance is conveyed (Art.
1323). The word “conveyed” refers to the
moment when the offeror has knowledge of the
acceptance of the offeree.
MEMORY AID IN CIVIL LAW
Theories that determine the exact moment of
perfection when acceptance is made by letter
or telegram:
1. Manifestation Theory – perfected from the
moment the acceptance is declared or made.
2. Expedition Theory – perfected from the
moment the offeree transmits the notification
of acceptance to the offeror.
3. Reception Theory – perfected from the
moment that the notification is in the hands of
the offeror in such a manner that he can,
under ordinary conditions, procure the
knowledge of its contents, even if he is not
able actually to acquire such knowledge.
4. Cognition Theory – perfected from the
moment the acceptance comes to the
knowledge of the offeror.
NOTES: Contracts under the Civil Code generally
adhere to the Cognition Theory, while
transactions under the Code of Commerce use
the Manifestation Theory
Generally, what is required by the law is actual
knowledge of the acceptance. However,
when the offeror, being able to know the
contents of a letter or telegram, refused to
open it because for some reason he has
changed his mind or he has already decided to
revoke his offer or proposal, the better rule
would be to say that since the offeror has
already a constructive knowledge of the
contents of the letter or telegram, it is but
logical that he shall be bound by the
acceptance made by the offeree (3 Castan, 7th
Ed., p. 387).
An offer made inter praesentes must be accepted
IMMEDIATELY. If the parties intended that
there should be an express acceptance, the
contract will be perfected only upon knowledge
by the offeror of the express acceptance by the
offeree of the offer. An acceptance which is
not made in the manner prescribed by the
offeror is NOT EFFECTIVE BUT A COUNTER-
OFFER which the offeror may accept or reject
(Malbarosa v. CA, et al., G.R. No. 125761, April 30,
2003).
OPTION CONTRACT
A preparatory contract in which one party grants to
the other, for a fixed period, to decide whether or
not to enter into a principal contract.
EFFECTS OF OPTION (Art. 1324)
Option without consideration – the offeror may
withdraw his offer by communicating such
withdrawal to the offeree at anytime before
acceptance
Option with consideration – the offeror cannot
withdraw his offer
San Beda College of Law
Nature of Business Advertisements (Art.
1325)
• Are not definite offer, but mere invitation to
make an offer, unless it appears otherwise
NATURE OF ADVERTISEMENT FOR
BIDDERS (Art. 1326)
Are simply invitation to make proposals, and
advertiser is not bound to accept the highest or
lowest bidder, unless it appears otherwise
PERSONS INCAPACITATED TO GIVE
CONSENT (Art. 1327)
1. Minors
EXCEPTION:
• Contracts entered into by a minor who
misrepresents his age. (It must be an
active not merely constructive
representation);
• Contracts involving the sale and delivery
of necessaries to minors
• Contracts by guardians or legal
representatives
2. Insane or demented persons, unless the
contract was entered into during a lucid
interval
3. Deaf-mutes who do not know how to read and
write
NOTES: According to Corpus Juris Secundum (43,
p. 206), ‘mere silence when making a contract as to
his age does not constitute a fraud which can be
made the basis of an action for deceit.
Minors are not liable if they are only co-debtors
and they kept silent during the perfection of the
contract. They are not guilty of active
misrepresentation (Braganza v. Villa Abrille, GR
No.L-12471, April 13, 1959).
Insanity or mental incapacity must be existing at
the celebration of the contract.
Contracts entered into during a lucid interval is
valid (Art. 1328).
INCAPACITY TO GIVE CONSENT (Art. 1327) vs.
DISQUALIFICATION TO CONTRACT (Art. 1329)
Article 1327 Article 1329
1. Restrains the exercise of 1. Restrains the
the right to contract. very right itself
2. Based upon subjective 2. Based upon
circumstances of certain public policy and
persons morality
3. Voidable 3. Void
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2008 CENTRALIZED BAR OPERATIONS
VICES OF CONSENT (Art. 1330): (MIVUF)
a. Mistake
b. Violence
c. Intimidation
d. Undue influence
e. Fraud
A.
MISTAKE
Mistake must refer to the substance of the
thing which is the object of the contract; or
to those conditions which have principally
moved one or both parties to enter into the
contract (Art. 1331).
Not only wrong conception of the thing but also
the lack of knowledge with respect to it
(Manresa).
Two General Kinds of Mistake:
a. Mistake of fact – when one or both of the
contracting parties believe that a fact
exists when in reality it does not, or that
such fact does not exist when in reality it
does.
b. Mistake of law – when one or both of the
contracting parties arrive at an erroneous
conclusion regarding the interpretation of a
question of law or the legal effects of a
certain act or transaction.
GENERAL RULE: Only mistake of fact and
not mistake of law will vitiate consent.
EXCEPTION: Mistake of law may vitiate
consent when it involves mutual error as to
the effect of an agreement when the real
purpose of the parties is frustrated (Art.
1334).
Requisites of Art. 1334 which will vitiate
consent:
1. Mistake must be with respect to the legal
effect of an agreement;
2. It must be mutual; and
3. The real purpose of the parties must have
been frustrated.
B.
VIOLENCE
when in order to wrest consent, serious or
irresistible force is employed (Art. 1335).
Requisites of Violence:
1. It must be serious or irresistible
2. It must be the determining cause for the
party upon whom it is employed in
entering into the contract
122 MEMORY AID IN CIVIL LAW
Obligations & Contracts

C. Kinds of Fraud:
INTIMIDATION A. Fraud in the PERFECTION of the contract
when one of the contracting parties is a. Causal Fraud (Dolo Causante)
compelled by a reasonable and well-grounded
fear of an imminent and grave evil upon his b. Incidental Fraud (Dolo Incidente)
person or property, or upon the person or B. Fraud in the PERFORMANCE of an
property of his spouse, descendants or obligation (Art. 1170)
ascendants, to give his consent (Art. 1335).
Requisites of Fraud under Art. 1338:
Requisites of Intimidation:
1. Fraud or insidious words or machinations
1. One of the parties is compelled to give his must have been employed by one of the
consent by a reasonable and well- contracting parties;
grounded fear of an evil;
2. It must have been serious;
2. The evil must be imminent and grave;
3. It induced other party to enter into a
3. The evil must be unjust; and contract;
4. The evil must be the determining cause for 4. Should not have been employed by both
the party upon whom it is employed in contracting parties or by third persons.
entering into the contract.
Character of intimidation:
DOLO CAUSANTE AND DOLO INCIDENTE
It must be actual, serious and possible of DISTINGUISHED
realization, and that the actor can still and will
carry out his threat. Dolo Causante Dolo Incidente
(Art. 1338) (Art. 1344)
Reluctant Consent
1. Refers to fraud 1. Refers to fraud which
A contract is valid even though one of the which is serious in is not serious in
parties entered into it against his wishes and character character
desires or even against his better judgment.
Contracts are also valid even though they are 2. It is the cause which 2. It is not the cause that
entered into by one of the parties without hope induces the party to induced the party to
of advantage or profit (Martinez v. Hongkong and enter into a contract enter into a contract
Shanghai Bank, 15 Phil. 252). 3. Renders the 3. Renders the party
contract voidable liable for damages

D.
UNDUE INFLUENCE
when a person takes improper advantage of
his power over the will of another, depriving the
latter of a reasonable freedom of choice (Art.
1337).
Test of undue influence:
The test in order to determine whether or not
there is undue influence which will invalidate a
contract is to determine whether or not the
influence exerted has so overpowered or
subjugated the mind of a contracting party as
to destroy his free agency, making him express
the will of another rather than his own (Coso v.
Fernandez Deza, GR No. 16763, December 22, 1921).
E.
FRAUD
when, through insidious words or machinations
of one of the contracting parties, the other is
induced to enter into a contract which, without
them, he would not have agreed to (Art. 1338).
NOTES: Failure to disclose facts, when there is a
duty to reveal them, constitutes fraud (Art. 1339).
The usual exaggeration in trade, when the other
party had an opportunity to know the facts, are
not in themselves fraudulent (Art. 1340).
A mere expression of an opinion does not
signify fraud unless made by an expert and the
other party relied on the former’s special
knowledge (Art. 1341).
As a rule, fraud by third person does not vitiate
consent unless
i. such misrepresentation has created
substantial mistake and the same is
mutual.
ii. If the third person makes the
misrepresentation with the complicity, or at
least, with the knowledge, but without the
objection, of the contracting party who is
favored.
Misrepresentation made in good faith is not
fraudulent but may constitute error (Art. 1343).
San Beda College of Law 123
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SIMULATION OF CONTRACTS (Arts. the contract, or at least, it can exist

1345-1346)
Kinds of simulations of contract:
1. Absolute – when the contracting parties
do not intend to be bound by the contract
at all. Thus, an absolutely simulated
contract is VOID.
2. Relative – when the contracting parties
conceal their true agreement. A relatively
simulated contract binds the parties to
their real agreement, when it does not
prejudice a third person and is not
intended for any purpose contrary to law,
morals, good customs, public order or
public policy.
Two judicial acts in simulated contracts
1. Ostensible Act (Apparent or Fictitious) –
pretended contract
2. Hidden Act (Real) – true agreement
OBJECT
The thing, right or service which is the subject
matter of the obligation arising from the
contract.
Requisites:
a. It must be within the commerce of man;
subsequently or in the future.
It is clear from Art. 1347 that a future thing may
be the object of a contract. Such contract
according to Manresa, maybe interpreted in
two possible ways:
1. Conditional contract – if its efficacy
should depend upon the future existence
of the thing
2. Aleatory contract – if one of the
contracting parties should bear the risk
that the thing will never come into
existence
When Article 1349 says that the object must be
determinate as to its kind, it simply means that
the genus of the object should be
expressed although there might be no
determination of the individual specie.
CAUSE
It is the immediate, direct or most proximate
reason which explains and justifies the
creation of obligation through the will of the
contracting parties.
Essential requisites of causes:
a. Cause should be in existence at the time
of the celebration of the contract;

b. It should be real or possible; b. Cause should be licit or lawful; and

c. It should be licit; and c. Cause should be true.

d. The object should be determinate, or at

least possible of determination, as to its CAUSE AND MOTIVE DISTINGUISHED
kind.
Cause Motive
1. Direct and most 1. Indirect or remote
THINGS WHICH CANNOT BE THE OBJECT OF proximate reason of a reasons
CONTRACTS (Art. 1347-1349): contract
GENERAL RULE: All things or services may be 2. Objective or juridical 2. Psychological or
the object of contracts. reason of a contract purely personal reason
EXCEPTIONS: 3. Cause is always the 3. The motive differs for
1. Things which are outside the commerce of same for each each contracting party
men; contracting party

2. Intransmissible rights; 4. Legality/illegality of 4. Legality/illegality of

3. Future inheritance, except in cases
expressly authorized by law;
4. Services which are contrary to law, morals,
good customs, public order or public
policy;
5. Impossible things or services;
6. Objects which are not possible of
determination as to their kind.
NOTES: The most evident and fundamental
requisite in order that a thing, right or service may
be the object of a contract, it should be in
existence at the moment of the celebration of
cause affects the motive does not affect
existence or validity of the existence or validity
the contract of contract
NOTE: There are times, however when motive
may be regarded as cause when the contract is
conditioned upon the attainment of the motive of
either contracting party. In other words, motive
becomes cause when it predetermines the
purpose of the contract (Jurado p. 459).
In onerous contracts, the cause is understood to
be, for each contracting party, the prestation of
promise of a thing or service by the other.
124 MEMORY AID IN CIVIL LAW
Obligations & Contracts

In accessory contracts, the rule is that the cause from a purely moral obligation, such as that
of the accessory contract is identical with that referred to in the case of Fisher vs. Robb.
of the principal contract. Thus, it was held that
as a mortgage is an accessory contract, its
cause is the very cause of the principal EFFECT OF LACK OF CAUSE,
contract from which it derives its life and UNLAWFUL CAUSE AND FALSE CAUSE
existence (China Banking Corp. v. Lichauco. 46 Phil. (Arts. 1352-1354)
460).
1. Lack of cause – there is a total lack or
In remuneratory contracts, the cause is the absence of cause
service or benefit which is remunerated.
2. Illegal cause – the cause is contrary to law,
In contracts of pure beneficence, the cause is morals, good customs, public order and public
the mere liberality of the donor or benefactor. policy
3. False cause – the cause is stated but that
cause is not true
Moral obligation as cause:
Where the moral obligation arises wholly from CAUSE EFFECT
ethical considerations, unconnected with any 1. Lack of the contract confers no right and
civil obligations, it cannot constitute a sufficient cause produces no legal effect
cause or consideration to support an onerous
contract (Fisher v. Robb, GR No.L-46274, November 2, 2. Illegality of
the contract is null and void
1939). cause
the contract is void if it should
Where such moral obligation is based upon a
3. Falsity of not be proved that they were
previous civil obligation which has already
cause founded upon another cause
been barred by the statute of limitations at the
which is true and lawful
time when the contract is entered into, it
constitutes a sufficient cause or consideration shall not invalidate the contract,
to support a contract (Villaroel v. Estrada, 71 Phil. 4. Lesion or unless (a) there is fraud,
14). inadequacy of mistake or undue influence; or
cause (b) when the parties intended a
NOTE: Strictly speaking, the moral obligation in donation or some other contract
this case is a natural obligation, as distinguished

Art. 1356 retained the “Spiritual System” of
the Spanish Code by virtue of which the law
Contracts which must appear in a public
looks more at the spirit rather than the form of
document :
contracts
GENERAL RULE: Contracts shall be obligatory, in
whatever form they may have been entered
into, provided all the essential requisites for
their validity are present (Art. 1356).
EXCEPTIONS:
1. When the law requires that the contract
must be in a certain form in order to be
valid (Art. 1357-1358);
2. When the law requires that the contract
must be in a certain form in order to be
enforceable (Statute of Frauds).
Contracts which must appear in writing:
1. Donation of personal property whose
value exceeds five hundred pesos (Art.
748);
2. Sale of a piece of land or any interest
therein through an agent (Art. 1874);
3. Agreements regarding payment of interest
in contracts of loan (Art. 1956); and
Form of Contracts
4. Antichresis (Art. 2134).
1. Donation of immovable properties (Art.
749);
2. Partnership where immovable property or
real rights are contributed to the common
fund (Arts. 1171 and 1773);
3. Acts and contracts which have for their
object the creation, transmission,
modification or extinguishment of real
rights over immovable property; sales of
real property or of an interest therein is
governed by Articles 1403, No. 2, and
1405 (Art. 1358, no. 1);
4. The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal
partnership of gains (Art. 1358, no. 2);
5. The power to administer property, or any
other power which has for its object an act
appearing or which should appear in a
public document, or should prejudice a
third person (Art. 1358, no. 3); and
San Beda College of Law
6. The cession of actions or rights
proceeding from an act appearing in a
public document (Art. 1358, no. 4).
Contracts which must be registered
1. Chattel mortgages (Art. 2140)
2. Sale/transfer of large cattle (Cattle Registration
Act).
NOTES: Arts. 1357-1358 do not require the
execution of the contract either in a public/private
document in order to validate/enforce it but only
to insure efficacy, so that after its existence has
been admitted, the party bound may be
compelled to execute the necessary
document.
Even where the contract has not been reduced to
the required form, it is still valid and binding as
far as the contracting parties are concerned.
Consequently, Art. 1357-1358 presuppose
the existence of a valid and enforceable
contract;
When one of the contracting parties invokes Art.
1357, the effect is to place the existence of
the contract in issue, which must be resolved
by the ordinary rules of evidence;
Art. 1357 does not require that the action to
compel the execution of the necessary
document must precede the action upon the
contract. As a matter of fact, both actions
may be exercised simultaneously.
From the moment when any of the contracting
parties invokes Art. 1357 it is evident that
under them the execution of the required
document must precede the determination of
the other obligations derived from the contract.
A contract may be encompassed in several
instruments even though every instrument is
not signed by the parties since it is sufficient if
the unsigned instruments are clearly identified
or referred to and made part of the signed
instrument or instruments (BF Corporation v. CA,
GR No. 120105, March 27, 1998).
RA 8792 (E- COMMERCE ACT) provides that the
formal requirements to make contracts effective
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as against third persons and to establish the
existence of a contract are deemed complied with
provided that the electronic document is unaltered
and can be authenticated as to be usable for
future reference.
REFORMATION OF INSTRUMENTS
REFORMATION
that remedy in equity by means of which a
written instrument is made or construed so as
to express or conform to the real intention of
the parties when some error or mistake has
been committed.
Requisites:
a. There must be meeting of the minds of the
contracting parties;
b. Their true intention is not expressed in the
instrument;
c. Such failure to express their true intention
is due to mistake, fraud, inequitable
conduct or accident and
d. Clear and convincing proof of mistake,
accident, relative simulation, fraud, or
inequitable conduct.
Instances when there can be no reformation
(Art. 1366):
1. Simple donations inter vivos wherein no
condition is imposed;
2. Wills;
3. When the agreement is void.
NOTES:
If mistake, fraud, inequitable conduct or accident
has prevented a meeting of the minds of
the parties, the proper remedy is not
reformation of the instrument but annulment
of the contract (Art. 1359).
When one of the parties has brought an action to
enforce the instrument, no subsequent
reformation can be asked (Principle of estoppel).
The doctrine of reformation of instruments is
based on justice and equity.
126 MEMORY AID IN CIVIL LAW
Obligations & Contracts

COMPARATIVE TABLE OF DEFECTIVE CONTRACTS

VOID VOIDABLE RESCISSIBLE UNENFORCEABLE

1. Defect is caused by Defect is caused by Defect is caused by Defect is caused by lack of form,
lack of essential vice of consent injury/ damage either to authority, or capacity of both
elements or illegality one of the parties or to a parties not cured by prescription
3rd person
2. Do not, as a Valid and Valid and enforceable Cannot be enforced by a proper
general rule produce enforceable until until they are rescinded action in court
any legal effect they are annulled by by a competent court
a competent court
3. Action for the Action for annulment Action for rescission may Corresponding action for recovery,
declaration or nullity or defense of prescribe if there was total or partial
or inexistence or annulability may performance of the unenforceable
defense of nullity or prescribe contract under No. 1 or 3 of Article
inexistence does not 1403 may prescribe
prescribe
4. Not cured by Cured by Cured by prescription Not cured by prescription
prescription prescription
5. Cannot be ratified Can be ratified Need not be ratified Can be ratified
6. Assailed not only Assailed only by a Assailed not only by a Assailed only by a contracting
by a contracting party contracting party contracting party but party
but even by a third even by a third person
person whose interest who is prejudiced or
is directly affected damaged by the contract
7. Assailed directly or Assailed directly or Assailed directly only Assailed directly or collaterally
collaterally collaterally

Rescissible Contracts
Contracts which is valid, but which is defective Rescission /Resolution Rescission of
because of injury or damage to either of the of Reciprocal Obligation Rescissible Contracts
contracting parties or to third persons, as a under Art. 1191 under Art. 1381
consequence of which it may be rescinded by 2. The only ground is 2. There are several
means of a proper action for rescission. failure of the parties to causes or grounds for
comply with what is such lesion.
NOTES: The action for rescission is incumbent upon him.
subsidiary; it cannot be instituted except when 3. Courts have 3. Court has no power to
the party suffering damage has no other legal discretionary power to grant extension of time
means to obtain reparation for the same (Art. grant an extension for for performance of the
1383). performance provided obligation so long as
that there is just cause. there is a ground for
Rescission shall be only to the extent necessary rescission.
to cover the damages caused (Art. 1384).
4. Only reciprocal 4. Any contract,
Rescission shall not take place when the things contracts may be unilateral or reciprocal,
which are the object of the contract are legally resolved. may be rescinded
in the possession of third person who did
not act in bad faith (Art. 1385, par. 2).
CONTRACTS THAT ARE RESCISSIBLE
Rescission /Resolution Rescission of (Arts. 1381-1382):
of Reciprocal Obligation Rescissible Contracts
under Art. 1191 under Art. 1381 1. Those entered into by guardians where
1. May be instituted only 1. May be instituted not the ward suffers lesion of more than " of
by a party to the contract. only by a party to the the value of the things which are objects
contract but even by a thereof;
third person.
2. Those agreed upon in representation of
absentees, if the latter suffer lesion by
more than " of the value of the things
which are subject thereof;
San Beda College of Law
3. Those undertaken in fraud of creditors
when the latter cannot in any manner
claim what are due them;
4. Those which refer to things under
litigation if they have been entered into by
the defendant without the knowledge and
approval of the litigants and the court;
5. All other contracts especially declared by
law to be subject to rescission; and
6. Payments made in a state of insolvency
for obligation whose fulfillment the debtor
could not be compelled at the time they
were effected.
Requisites before contracts entered into in
behalf of absentees may be rescinded on the
ground of LESION:
1. The contract must have been entered
into by a guardian in behalf of his ward or
by a legal representative in behalf of an
absentee;
2. The ward or absentee must have suffered
lesion of more than " of the value of the
property which is the object of the
contract;
3. The contract must have been entered into
without judicial approval;
4. There must be no other legal means of
obtaining reparation for the lesion;
5. The person bringing the action must be
able to return whatever he may be
obliged to restore; and
6. The object of the contract must not be
legally in the possession of a third person
who did not act in bad faith.
Requisites before a contract entered into in
FRAUD OF CREDITORS may be rescinded:
1. There must be credit existing prior to the
celebration of the contract;
2. There must be fraud, or at least, the
intent to commit fraud to the prejudice of
the creditor seeking rescission;
3. The creditor cannot in any legal manner
collect his credit; and
4. The object of the contract must not be
legally in the possession of a third person
who did not act in bad faith.
PRESUMPTION OF FRAUD (Art. 1387)
1. Alienation of property by gratuitous title if
the debtor has not reserved sufficient
property to pay all of his debts contracted
before such alienation;
2. Alienation of property by onerous title if
made by a debtor against whom some
judgment has been rendered in any
127
2008 CENTRALIZED BAR OPERATIONS
instance or some writ of attachment has
been issued.
Badges of fraud:
1. The fact that the cause or consideration of
the conveyance is inadequate or fictitious;
2. A transfer made by a debtor after suit has
been begun and while it is pending against
him;
3. A sale on credit by an insolvent debtor;
4. Evidence of indebtedness or complete
insolvency
5. The transfer of all or nearly all of his
property by a debtor, especially when he is
insolvent or greatly embarrassed
financially;
6. The transfer made between father and
son, where there are present others of the
above circumstances;
7. The failure of the vendee to take exclusive
possession of all the property.
Requisites before a PAYMENT MADE BY
INSOLVENT can be rescinded:
1. It must have been made in a state of
insolvency; and
2. That the obligation must have been one
which the debtor could not be compelled
to pay at the time such payment was
effected.
Apparent conflict between Article 1382 and
Article 1198 [1] if the obligation is subject to
suspensive period:
Under Article 1382, payment made by an insolvent
is rescissible. Under Article 1198 [1], a debtor
can be compelled to pay by the creditor even
before the expiration of the period since by his
insolvency he has already lost his right to the
benefit of such period.
According to Manresa, however, the conflict can
easily be resolved by considering the priority of
dates between the two debts. If the obligation
with a period became due before the obligation
to the creditor seeking the rescission became
due, then the latter cannot rescind the
payment even if such payment was effected
before the expiration of the period; but if the
obligation with a period became due after the
obligation to the creditor seeking rescission
became due, then the latter can rescind the
payment.
EFFECT OF RESCISSION (Art. 1385)
1. As to the parties – mutual restitution
together with the fruits and interest. NOTE:
this is only applicable to rescissory actions on
the ground of lesion and not to rescissory
actions on the ground of fraud.
128
Obligations & Contracts
2. As to third person
a. Bad faith or not legally in possession –
obliged to return
b. Legally in possession and not in bad faith
– no rescission; however, indemnity for
damages may be demanded from the
person causing the loss
Those in which all of the essential elements for
validity are present, although the element of
consent is vitiated either by lack of legal capacity
of one of the contracting parties, or by mistake,
violence, intimidation, undue influence, or fraud.
CONTRACTS WHICH ARE VOIDABLE
(Art. 1390):
1. Those where one of the parties is
incapable of giving consent to a contract;
2. Those where the consent is vitiated by
mistake, violence, intimidation, undue
influence or fraud.
Modes to extinguish an action for annulment:
1. Prescription;
2. Ratification; and
3. Loss of the thing which is the object of the
contract through fraud or fault of the
person who is entitled to institute the
action.
PRESCRIPTIVE PERIOD: ACTION FOR
ANNULMENT (Art. 1391):
a. Contracts entered into by incapacitated
person – within 4 years from the time
guardianship ceases;
b. Where consent is vitiated by violence,
intimidation or undue influence – within 4
years from the time such violence,
intimidation or undue influence ceases;
c. Where consent is vitiated by mistake or fraud
– within 4 years from the time of the discovery
of such mistake or fraud.
NOTE: Discovery of fraud must be reckoned to
have taken place from the time the document was
MEMORY AID IN CIVIL LAW
PRESCRIPTIVE PERIOD: ACTION FOR
RESCISSION (Art. 1389):
a. under Art. 1381 no. 1 – within 4 years from
the time the termination of the incapacity of
the ward
b. under Art. 1381 no. 2 – within 4 years from
the time the domicile of the absentee is
known
c. under Art. 1381 nos. 3 and 4 as well as Art.
1382 – within 4 years from the time of the
discovery of fraud
d. In certain contracts of sale which are specially
declared by law to be rescissible, the period is
6 months or even 40 days, counted from the
day of delivery (Articles 1542, 1571, 1577).
Voidable Contracts
registered in the office of the register of deeds.
Registration constitutes constructive notice to the
whole world (Carantes v. CA, GR No.L-33360, April 25,
1977).
RATIFICATION (Arts. 1392-1396):
The act or means by virtue of which efficacy is
given to a contract which suffers from a vice of
curable nullity.
• The action for annulment of a voidable
contract may also be extinguished by
ratification. It cleanses the contract of its
defects from the moment it was
constituted.
Requisites of ratification:
a. The contract should be tainted with a vice
which is susceptible of being cured;
b. The confirmation should be effected by the
person who is entitled to do so under the
law;
c. The cause of the nullity or defect should
have already disappeared; and
d. It should be effected with knowledge of the
vice or defect of the contract.
WHO MAY INSTITUTE ACTION FOR
ANNULMENT (Art. 1397):
GENERAL RULE: Action for annulment may be
instituted by all who are thereby obliged
principally or subsidiarily. Consequently, a
third person who is a stranger to the contract
cannot institute an action for annulment.
EXCEPTION: If a third person is prejudiced in his
rights with respect to one of the contracting
parties, and can show detriment which would
positively result to him from the contract in
San Beda College of Law
which he has no intervention (Teves v. People’s
Homesite & Housing Corp., GR No. 21498, June 27,
1968)
Effects of annulment:
1. If contract has not yet been consummated
– parties shall be released from the
obligations arising therefrom;
2. If contract has already been consummated
– rules provided in Arts. 1398-1402 shall
govern.
EFFECTS OF ANNULMENT IN CASES
O F C O N S U M M AT E D V O I D A B L E
CONTRACT (Arts. 1398-1399)
Obligation of Mutual Restitution:
1. Obligation to give – upon annulment of the
contract, the parties shall restore to each
other the things which have been subject
matter of contract with fruits and the price with
interest, except in cases provided by law.
2. Obligation to do or not to do – upon
annulment of the contract, there will have to
be an apportionment of damages based on
the value of such prestation with
corresponding interests.
3. When the defect of the contract consists in
incapacity of one of the contracting parties
Unenforceable Contracts (Art. 1403)
Those which cannot be enforced by proper action
in court unless they are ratified , because, either:
i. they are entered into without or in excess of
authority;
ii. they do not comply with the statute of frauds;
iii. both contracting parties do not possess the
required legal capacity.
STATUTE OF FRAUDS (Art. 1403, no. 2):
In the ff. cases, an agreement hereafter made
shall be unenforceable by action, UNLESS the
same, or some note or memorandum thereof, be
in writing, and subscribed by the party charged,
or by his agent; evidence thereof, of the
agreement cannot be received without the writing,
or a secondary evidence of its contents:
a. An agreement that by its term is not to be
performed within one year from the making
thereof;
b. A special promise to answer for the debt,
default or miscarriage of another;
c. An agreement in consideration of marriage,
other than a mutual promise to marry;
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2008 CENTRALIZED BAR OPERATIONS
- the incapacitated person is not obliged to
make restitution except insofar as he has
been benefited by the thing or price received
by him. NOTE: It is presumed in the absence
of proof that no such benefit has accrued to
the incapacitated person (8 Manresa, 5th Ed., Bk.
2, p. 647)
E F F E C T O F FA I L U R E T O M A K E
RESTITUTION (Arts. 1400-1402)
Where the thing is lost -
a. Due to fault of defendant – he shall return the
fruits received and the value of the thing at
the time of loss, with interest from the same
date
b. Due to fault of plaintiff – the action for
annulment shall extinguish
c. Due to fault of the incapacitated – whether the
loss occurred during the plaintiff’s incapacity
or after he had acquired capacity, the action
for annulment would still be extinguished in
accordance with Art. 1401, par. 1
d. Due to fortuitous event – contract can still be
annulled, but the defendant can be held liable
only for the value of the thing at the time of
loss without interest thereon.
d. An agreement for the sale of goods, chattels
or things in action, at a price not less than 500
pesos, unless the buyer accepted and
received such goods and chattels or
evidences or some of them, of such things in
action or pay at the time some part of the
purchase money; but when a sale is made by
auction and entry is made by the auctioneer in
his sales book, at the time of sale, of the
amount and kind of property sold, terms, price
names of the purchasers and persons to
whose account the sale is made, it is a
sufficient memorandum;
e. An agreement for leasing for a longer period
than one year; or for the sale of real property
or interest therein; and
f. A representation as to the credit of a third
person.
NOTES: Art. 1403, no.2(b) does not refer to the
original or independent promise of the debtor to
his own creditor. It refers rather to a collateral
promise.
The Statute of Frauds was enacted for the
purpose of preventing frauds. Hence, it
should not be made the instrument to further
them (PNB v. Phil. Vegetable Oil Co. GR No. L-25400,
130 MEMORY AID IN CIVIL LAW
Obligations & Contracts

January 14, 1927; Shoemaker v. La Tondena, GR No. R AT I F I C AT I O N O F C O N T R A C T S

45667, May 9, 1939). INFRINGING THE STATUTE OF FRAUDS
The statute of frauds applies only to executory (Art. 1405):
contracts, not to those that are partially or
Such contracts may be ratified:
completely fulfilled.
1. By failure to object to the presentation of oral
evidence to prove such contracts; or
2. By the acceptance of benefits under these
contracts

Void or Inexistent Contracts

In general, it is defined as one which lacks
absolutely either in fact or in law one or some of
the elements which are essential for its validity.
NOTES: Although used interchangeably, strictly
speaking VOID and INEXISTENT CONTRACTS
are different from each other.
The defense of illegality of contract is not available
to third persons whose interests are not
directly affected (Art. 1421).
A contract which is the direct result of a previous
illegal contract, is also void and inexistent (Art.
1422).
VOID CONTRACTS AND INEXISTENT CONTRACTS
DISTINGUISHED
6. Those where the intention of the parties
relative to the principal object of the contract
cannot be ascertained; and
7. Those expressly prohibited or declared void
by law.
PRINCIPLE OF IN PARI DELICTO
(Arts. 1411-1419):
GENERAL RULE: When the defect of a void
contract consists in the illegality of the cause
or object of the contract and both of the
parties are at fault or in pari delicto, the law
refuses them every remedy and leaves them
where they are.
EXCEPTIONS:

Inexistent 1. Payment of usurious interest (Art. 1413);

Void Contracts
Contracts 2. Payment of money or delivery of property
Those where all of the Those where one for an illegal purpose, where the party who
requisites of a contract are or some or all of paid or delivered repudiates the contract
present but the cause, object the requisites before the purpose has been
or purpose is contrary to law, essential for the accomplished, or before any damage has
morals, good customs, public validity of a been caused to a third person (Art. 1414);
order or public policy, or contract are 3. Payment of money or delivery of property
contract itself is prohibited or absolutely made by an incapacitated person (Art.
declared void by law. lacking. 1415);
covers Art. 1409 nos. covers Art. 1409
4. Agreement or contract which is not illegal
1,3,4,5,6, and 7 nos. 2 and 3
per se but merely prohibited by law, and
the prohibition is designed for the
protection of the plaintiff (Art. 1416);
CONTRACTS WHICH ARE INEXISTENT
AND VOID AB INITIO (Art. 1409): 5. Payment of any amount in excess of the
maximum price of any article or
1. Those whose cause, object or purpose is commodity fixed by law (Art. 1417);
contrary to law, morals, good customs, public
order or public policy; 6. Contract whereby a laborer undertakes to
work longer than the maximum number of
2. Those which are absolutely simulated or hours fixed by law (Art. 1418);
fictitious;
7. Contract whereby a laborer accepts a
3. Those whose cause or object did not exist at wage lower than the minimum wage fixed
the time of the transaction; by law (Art. 1419); and
4. Those whose object is outside the commerce 8. One who lost in gambling because of
of men; fraudulent schemes practiced on him is
5. Those which contemplate an impossible allowed to recover his losses [Art. 315, 3 (b),
service; RPC] even if gambling is a prohibited one.
San Beda College of Law 131
2008 CENTRALIZED BAR OPERATIONS

NOTE: The principle of In Pari Delicto is Innocent party may demand for the return of
applicable only to void contracts and not as to what he has given.
inexistent contracts.
2. Executory Contracts - Neither of the
contracting parties can demand for the
fulfillment of any obligation from the contract
Rules when only one of the parties is at fault:
nor may be compelled to comply with such
1. Executed Contracts: obligation.
Guilty party is barred from recovering what he
has given to the other party by reason of
the contract.

Natural Obligations
Those based on equity and natural law, which do NATURAL OBLIGATION AND MORAL OBLIGATION
not grant a right of action to enforce their DISTINGUISHED
performance, but after voluntary fulfillment by the
obligor, authorize the retention of what has Natural Obligation Moral Obligation
been delivered or rendered by reason thereof 1. There is a juridical tie 1. No juridical tie
(Art. 1423). between the parties whatsoever.
NOTES: The binding tie of these obligations is in which is not enforceable
the conscience of man, for under the law, they do by court action
not have the necessary efficacy to give rise to an 2. Voluntary fulfillment 2. Voluntary fulfillment
action. of such produces legal of such does not
Reason for regulation of natural obligation $ effects which the court produce any legal effect
Equity, morality and justice – these are, after will recognize and which the court will
all, the abiding foundation of positive law. A protect. recognize and protect.
broad policy justifies a legal principle that
would encourage persons to fulfill their moral
obligations, Examples of natural obligations:
Although used interchangeably in this jurisdiction, 1. Performance after the civil obligation has
natural and moral obligations are different from prescribed (Art. 1424);
each other. 2. Reimbursement of a third person for a debt
that has prescribed (Art. 1425);
3. Performance after action to enforce civil
obligation has failed (Art. 1428);
4. Payment by heir of debt exceeding value of
property inherited (Art. 1429); and
5. Payment of legacy after will have been
declared void (Art. 1430).

Estoppel
A condition or state by virtue of which an c. Estoppel by judgment
admission or representation is rendered
3. Estoppel by laches
conclusive upon the person making it and
cannot be denied or disproved as against the
person relying thereon (Art. 1431). LACHES OR “STALE DEMANDS”
Kinds of estoppel: Failure or neglect, for an unreasonable and
1. Estoppel in pais unexplained length of time, to do that which, by
exercising due diligence, could or should have
a. Estoppel by silence
been done earlier; it is negligence or omission
b. Estoppel by acceptance of benefits to assert a right within reasonable time,
warranting a presumption that the party
2. Technical estoppel
entitled to assert it either has abandoned it or
a. Estoppel by deed declined.
b. Estoppel by record
132 MEMORY AID IN CIVIL LAW
Obligations & Contracts

Elements of laches: complainant, or the suit is not held to be

barred.
a. Conduct on part of the defendant, or of
one under whom he claims, giving rise to
the situation of which complaint is made
LACHES AND PRESCRIPTION DISTINGUISHED
and for which the complaint seeks a
remedy; Laches Prescription
b. Delay in asserting the complainant’s 1. concerned with effect 1. concerned with
rights, the complainant having had of delay fact of delay
knowledge or notice, of the defendant’s
2. question of inequity 2. question or matter of
conduct and having been afforded an
of permitting the claim time
opportunity to institute a suit;
to be enforced
c. Lack of knowledge or notice on the part of
3. not statutory 3. statutory
the defendant that the complaint would
assert the right on which he bases his 4. applies in equity 4. applies at law
suit;; 5. not based on a fixed 5. based on a fixed time
d. Injury or prejudice to the defendant in the time
event relief is accorded to the

! END OF OBLIGATIONS AND CONTRACTS "

San Beda College of Law 133
2008 CENTRALIZED BAR OPERATIONS

CIVIL LAW
SALES AND LEASE
SALES AND LEASE

One of the contracting parties obligates himself to
transfer the ownership of and to deliver a
determinate thing and the other to pay therefor
a price certain in money or its equivalent (Art.
1458).
• A nominate contract
• A contract of sale may be:
a. absolute
b. conditional
NOTES: Delivery and payment in a contract of
sale are so interrelated and intertwined with
each other that without delivery of the goods
there is no corresponding obligation to pay. It is
clear that the two elements cannot be
dissociated, for the contract of purchase and
sale is essentially a bilateral contract, as it
gives rise to reciprocal obligations (Pio Barretto
Sons, Inc. v. Compania Maritima, 62 SCRA 167).
Neither is the delivery of the thing bought
nor the payment of the price necessary for the
perfection of the contract of sale. Being
consensual, it is perfected by mere consent.
Delivery makes the vendee the owner;
payment does NOT make the vendee the
owner.
Elements:
a. Essential elements – those without which,
there can be no valid sale; the elements of
Sales
an ordinary contract (consent/meeting of
the minds, object/subject and cause and
consideration).
b. Natural elements – inherent and are
deemed to exist even in the absence of
contrary provision, save those in the
contrary (warranties against eviction and
hidden defects).
c. Accidental elements – dependent on the
parties’ stipulation (e.g. conditions,
interest, penalty, time or place of payment,
etc.).
Characteristics: (CBOC NP)
1. Principal
2. Consensual;
3. Bilateral;
4. Nominate;
5. Commutative; In some cases, aleatory
(emptio spei);
Aleatory contract: one or both of the
parties bind themselves to give or do
something in consideration of what the
other shall give or do upon the happening
of an uncertain event, or is to occur at an
indeterminate time (e.g. Sale of
sweepstakes ticket).
6. Onerous.

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
134 MEMORY AID IN CIVIL LAW
Sales & Lease

CONTRACT TO SELL Effect of fulfillment of suspensive

Exclusive right and privilege to purchase an condition
object. The sale is perfected, Ownership is not
A bilateral contract whereby the prospective seller, such that if there has automatically
while expressly reserving the ownership of the been previous delivery of transferred to the
subject property despite delivery thereof to the the subject property to buyer although the
prospective buyer binds himself to sell the said the buyer, ownership property may have
property exclusively to the prospective buyer thereto automatically been previously
upon fulfillment of the condition agreed upon, transfers to the buyer delivered to him.
that is, full payment of the purchase price. by operation of law The prospective
without any further act on seller has to
! Absent a proviso in the contract that the title the part of the seller, convey title to
to the property is reserved in the vendor until the prospective
full payment of the purchase price or a buyer by entering
stipulation giving the vendor the right to into a contract of
unilaterally rescind the contract the moment absolute sale.
the vendee fails to pay within the fixed period,
the transaction is an absolute contract of sale Effect of sale of the subject property to 3rd
not a contract to sell (Dignos v. CA, G.R. No. persons
L-59266. February 29, 1988). A subsequent buyer who 1. A subsequent
has actual/constructive buyer, despite
! Other cases of contract to sell
knowledge of a defect in fulfillment of the
a. Where subject matter is indeterminate the seller’s title is not a suspensive
b. Sale of future goods registrant in good faith. condition is not a
The rights of the 1st buyer buyer in bad faith
c. Stipulation that deed of sale and cannot be defeated. and the
corresponding certificate of sale would be Ratio: Fulfillment of the prospective buyer
issued only after full payment suspensive conditions cannot seek the
Contract of Sale and Contract to Sell affects the seller’s title to relief of
Distinguished the property and previous reconveyance of
delivery of the property property.
Contract of Sale Contract to Sell automatically transfers Exception: If
ownership/title to the There was no
1. Title passes to the 1. Ownership is
buyer. previous sale of
buyer upon delivery reserved in the seller
the property.
of the thing sold and will pass only to the
buyer upon full • Sale by itself is not a mode of acquiring
payment of the price. o w n e rsh i p . It me re l y ca u se s ce rta i n
2. Non-payment of 2. Full payment is a obligations to arise
the price is a positive suspensive • “nemo dat quod non habet” (nobody can
negative resolutory condition, the failure of dispose of that which does not belong to him)
condition. The which is not a breach –the seller must be the owner, but he need
remedies of the but prevents the not be the owner at the time of the perfection
seller are: specific obligation of the vendor of the contract; it is enough that he is the
performance or to convey title from owner at the time the object is delivered;
rescission. having binding force otherwise, he may be held liable for breach
3. Vendor loses and 3. Title remains in the of warranty against eviction.
cannot recover vendor if the vendee • On the other hand, one cannot donate that
ownership of the does not comply with which he does not own, otherwise, the
thing sold and the condition precedent donation is void and inefficacious (Art. 751).
delivered until the of making payment at
contract of sale is the time specified in the
set aside contract

Conditional Sale and Contract to Sell

Distinguished

Conditional Sale Contract to Sell

Reservation of title to the subject property
In both cases the seller may reserve the title
to property until fulfillment of the suspensive
condition (e.g. payment)
San Beda College of Law 135
2008 CENTRALIZED BAR OPERATIONS

Objects of Sale
REQUISITES: Future inheritance cannot be sold.
1. THINGS A contract of sale of goods to be delivered at
a future time, entered into without the
c. determinate or determinable (Art. 1460)
intention of having any goods pass from
d. licit (Arts. 1347, 1409 [1,4], 1459) one party to another, but with an
understanding that at a fixed time, the
e. should not be impossible (Art. 1348) (e.g.
purchaser is merely to receive or pay the
must be within the commerce of man)
difference between the contract and the
2. RIGHTS – must be transmissible market prices, is illegal. This falls under
the definition of “futures” where the
Exceptions:
parties merely gamble on the rise or fall
a. future inheritance (Art. 1088) of prices which is null and void (Art. 2018,
b. service (Art. 1347) Onapal Phil. Commodities, Inc. v. CA, G.R. No.
90707 February 1, 1993).
A usufructuary may generally sell his
EMPTIO REI SPERATAE AND EMPTIO SPEI usufructuary right
DISTINGUISHED
Instances when the Civil Code recognizes sale
Emptio rei speratae Emptio spei of things not actually or already owned by the
seller at the time of the sale:
1. Sale of an 1. Sale of a mere hope or
expected thing expectancy that the thing 1. Sale of a thing having potential existence (Art.
will come to existence; 1461)
Sale of the hope itself 2. Sale of future goods (Art. 1462)
2. Sale is subject to 2. Sale is effective even if
3. Contract for the delivery at a certain price of
the condition that the the thing does not come
an article which the vendor in the ordinary
thing will exist; if it into existence, unless it is
course of the business manufactures or
does not, there is no a vain hope
procures for the general market, whether the
contract
same is on hand at the time or not (Art. 1467)
3. The uncertainty is 3. The uncertainty is with
with regard to the regard to the existence of
quantity and quality of the thing SALE AND AGENCY TO SELL DISTINGUISHED
the thing and not the
existence of the thing Sale Agency to sell
4. Object is a future 4. Object is a present 1. Buyer receives the 1. Agent receives the
thing thing which is the hope or goods as owner goods as goods of the
expectancy principal who retains his
ownership over them
NOTE: In case of doubt, the presumption is in
favor of emptio rei speratae which is more in 2. Buyer pays the price 2. Agent delivers the
keeping with the commutative character of the price which in turn he
contract. got from his buyer
3. Buyer, as a general 3. Agent can return the
rule, cannot return the goods in case he is
Goods which may be the Objects of Sale object sold unable to sell the same
a. EXISTING GOODS – goods owned or to a third person
possessed by the seller at the time of 4. Seller warrants the 4. Agent makes no
perfection. thing sold warranty for which he
b. FUTURE GOODS – goods to be assumes personal
manufactured, raised or acquired by the liability as long as he
seller after the perfection of the acts within his authority
contract. and in the name of the
seller
NOTES: A sale of future goods is valid only as
an executory contract to be fulfilled by the 5. Buyer can deal with 5. Agent in dealing with
acquisition and delivery of goods specified. the thing sold as he the thing received, must
pleases being the act according to the
There can be a sale of future property, but owner instructions of the
there can generally be no donation of principal
future property (Art. 751)
136 MEMORY AID IN CIVIL LAW
Sales & Lease

Rules to determine if the contract is one of BARTER

sale or a piece of work:
One of the parties binds himself to give one thing
a. If ordered in the ordinary course of in consideration of the other's promise to give
business – sale another thing.
b. If manufactured specially for the customer NOTE: In barter, there is no element of the price
and upon his special order, and not for the certain in money or its equivalent.
market – piece of work (Art. 1467)
If the consideration is partly in money and partly in
Schools of Thought: another thing, the nature of the contract will
depend on:
1. Massachusetts Rule: if specially done at
the order of another, this is a contract for a a. The manifest intention of the parties
piece of work (Philippine Application).
b. If the intent is not clear, apply the following
2. New York Rule: if the thing already exists- rules:
SALE; if not - WORK.
1. If the thing is more valuable than money –
3. English Rule: if material is more valuable- barter
SALE; if skill is more valuable - WORK.
2. If the money and the thing are of equal
C o n t r a c t o f P i e c e o f Wo r k a n d S a l e value – sale
Distinguished
3. If the thing is less valuable than money –
Contract for Piece sale
Sale
of Work
1. The thing 1. The thing transferred SALE AND DATION IN PAYMENT DISTINGUISHED
transferred is one is one which would have
not in existence existed and would have Sale Dation in Payment
and which never been the subject of sale 1. No pre-existing 1. Pre-existing credit
would have existed to some other person, credit
but for the order of even if the order had not
the party desiring been given 2. Obligations are 2. Obligations are
to acquire it created extinguished

2. The services 2. The primary objective 3. Consideration on 3. The debtor’s

dominate the of the contract is a sale
contract even of the manufactured
though there is a item; it is a sale of goods
sale of goods even though the item is
involved manufactured by labor
furnished by the seller
and upon previous order
of the customer
3. Not within the 3. Governable by the
Statute of Frauds Statute of Frauds
the part of the seller consideration is the
is the price; on the extinguishment of the debt;
part of the buyer is the creditor’s consideration
the acquisition of is the acquisition of the
the object object offered in lieu of the
original credit
4. Greater freedom 4. Less Freedom in
in determining the determining the price
price
5. Buyer still has to 5. The payment is received
pay the price by the debtor before the
contract is perfected.

The sum stipulated as the equivalent of the thing
sold and also every incident taken into
consideration for the fixing of the price, put to the
debit of the vendee and agreed to by him.
Requisites:
1. Certainty or ascertainability at the time of
perfection;
2. Real;
3. In some cases, must not be grossly
inferior to the value of the thing sold;
4. Paid in money or its equivalent.
Price
CERTAINTY
It is not necessary that the price be actual or
determined at the time of the execution of the
contract. The price is certain in the following
cases:
1. If the parties have fixed or agreed upon a
definite amount;
NOTE: The fixing of the price can not be left
to the discretion of one of the contracting
parties. However if the price fixed by one of
the parties is accepted by the other, the sale
is perfected.
San Beda College of Law
2. If it be certain with reference to another thing
certain
3. If the determination of the price is left to the
judgment of a specified person or persons
even before such determination
4. In the cases provided under Art. 1472, NCC
Effect when the price is fixed by the third
person designated:
GENERAL RULE: It is binding upon the
parties.
EXCEPTIONS:
1. When the third person acts in bad faith
or by mistake
2. When the third person disregards the
specific instructions or the procedure
marked out by the parties
Effect when the price is not fixed by the third
person designated:
1. If the third person refuses or cannot fix the
price, the contract shall become
ineffective, unless the parties
subsequently agree upon the price.
2. If the third person is prevented from fixing
the price by the fault of the seller or buyer,
the party not in fault may obtain redress
against the party in fault (rescission or
fulfillment with damages in either case)
Effect of Gross Inadequacy of Price:
1. Voluntary sales
GENERAL RULE: Mere inadequacy of the
price does not affect validity of the
sale if it is fixed in good faith and
without fraud (Hulst v. PR Builders Inc.,
G.R. No. 156364, September 3, 2007).
EXCEPTIONS:
a. Where low price indicates a vice of
consent, sale may be annulled or
Formation of Contract of Sale
PREPARATORY
POLICITATION
An unaccepted unilateral promise to buy or
sell. Even if accepted by the other party, it
does not bind the promisor and maybe
withdrawn anytime. This is a mere offer, and
has not yet been converted into a contract.
OPTION CONTRACT
A contract granting a privilege in one person,
for which he has paid a consideration, which
gives him the right to buy certain merchandise,
137
2008 CENTRALIZED BAR OPERATIONS
the contract is presumed to be an
equitable mortgage
b. Where the price is so low as to be
“shocking to conscience,” sale may
be set aside.
2. Involuntary or Forced sales
GENERAL RULE: Mere inadequacy of the
price is not a sufficient ground for the
cancellation of the sale of real
property.
EXCEPTIONS:
a. Where the price is so low as to be
shocking to the moral conscience,
judicial sale of personal property
will be set aside; or
b. if in the event of a resale, a better
price can be obtained.
NOTE: The validity of the sale is not
necessarily affected where the law gives to the
owner the right to redeem, upon the theory that
the lesser the price, the easier it is for the
owner to effect redemption.
Effect where price is simulated
1. If it is shown to have been in reality a
donation or some other act or contract -
The sale is void but the act or contract
may be valid as a donation
2. If not - The contract is void and inexistent
Effect of Failure to determine price:
1. Where contract executory - The contract is
inefficacious
2. Where the thing has been delivered to and
appropriated by the buyer - The buyer
must pay a reasonable price therefore
REASONABLE PRICE
generally the market price at the time and place
fixed by the contract or by law for the delivery of
the goods
at anytime within the agreed period, at a fixed
price.
• An option without consideration is void and
the effect is the same as if there was no
option
• However, in Sanchez vs. Rigos (1972),
even though the option was not supported
by a consideration, the moment it was
accepted, a perfected contract of sale
resulted, applying Art. 1324 of the NCC.
Thus, the only importance of the
consideration for an option is that the
138
Sales & Lease
option cannot be withdrawn by the grantor
after acceptance.
• In an option to buy, the party who has an
option may validly and effectively exercise
his right by merely notifying the owner of
the former ’s decision to buy and
expressing his readiness to pay the
stipulated price.
RIGHT OF FIRST REFUSAL
! It is a right of first priority all things and
conditions being equal; identity of the
terms and conditions offered to the
optionee and all other prospective buyers,
with optionee to enjoy the right of first
priority. A deed of sale executed in favor
of a third party who cannot be deemed a
purchaser in good faith, and which is in
violation of the right of first refusal granted
to the optionee is valid BUT rescissible
under Articles 1380 to 1381(3) of the New
Civil Code (Guzman Bocaling & Co. v. Bonnevie,
G.R. No. 86150, March 2, 1992; Riviera Filipina,
Inc. v. CA et. al. GR No. 117355, April 5, 2002).
! The basis of the right of first refusal must
be the current offer to sell of the seller or
offer to purchase of any prospective buyer.
Only after the optionee fails to exercise its
right of first priority under the same terms
and within the period contemplated could
the owner validly offer to sell the property
to a third person, again, under the same
terms as offered to the optionee (Paranaque
Kings Enterprises, Inc. v. CA. GR No. 111538,
February 26, 1997)
Effect of Promise Treated Under Art. 1479:
1. Accepted unilateral promise to sell or buy
• Only one makes the promise, this
promise is accepted by the other.
Example: A promises to sell to B, B
accepts the promise, but does not in turn
promise to buy.
• If accepted, it is binding upon the
promisor if the promise is supported by a
consideration distinct from the price. This
results to a perfected contract.
NOTE: Pending notice of its withdrawal, the
accepted promise partakes the nature of an
offer to sell which if accepted, results in a
perfected contract of sale (Sanchez v. Rigos, G.R.
No. L-25494, June 14, 1972). In other words, if the
acceptance is made before withdrawal, it
constitutes a binding contract of sale although
the option is given without consideration.
If promise is supported by a consideration
distinct and separate from the price (option
money), its acceptance will give rise to a
perfected contract.
MEMORY AID IN CIVIL LAW
2. Bilateral promise to buy and sell
• One party accepts the other’s promise to
buy and the latter, the former’s promise to
sell a determinate thing for a price certain
• it is reciprocally demandable
• It requires no consideration distinct from
the selling price
NOTE: No title of dominion is transferred as
yet, the parties being given only the right to
demand fulfillment or damages.
PERFECTION
GENERAL RULE: It is perfected at the moment
there is meeting of the minds upon a
determinate thing (object), and a certain price
(consideration).
EXCEPTION: When the sale is subject to a
suspensive condition by virtue of law or
stipulation.
! A definite agreement on the manner of
payment of the price is also an essential
element in the perfection of sale. The
agreement as to the manner of payment goes
into the price such that a disagreement on the
manner of payment is tantamount to a failure
to agree on the price (Toyota Shaw, Inc. v. CA GR
No. L-116650. May 23, 1995).
Requirements for perfection
a. When parties are face to face
When an offer is accepted without
conditions or qualifications
NOTES: A conditional acceptance is a
counter-offer
If negotiated thru phone it is as if it is
negotiated face to face
b. When contract is thru correspondence
or thru telegram
When the offeror receives or has
knowledge of the acceptance by the
offeree
NOTE: If the buyer has already accepted
but the seller does not know yet of such,
the seller may still withdraw.
c. When a sale is subject to a suspensive
condition
From the moment the condition is fulfilled
Transfer Of Ownership:
GENERAL RULE: While a contract of sale is
consensual, ownership of the thing sold is
acquired only upon its delivery, actual or
constructive, to the buyer (Daus v. Sps. De
Leon, GR No. 149750, June 16, 2003).
• This is true even if the purchase has
been made on credit. Payment of the
San Beda College of Law 139
2008 CENTRALIZED BAR OPERATIONS

purchase price is not essential to the
transfer of ownership, as long as the
property sold has been delivered
(Sampaguita Pictur es, Inc. v. Jalwindor
Manufacturers, Inc., GR No. L-43059, October
11, 1979).
• Nonpayment only creates a right to
demand payment or to rescind the
contract, or to criminal prosecution in
the case of bouncing checks (EDCA
Publishing and Distributing Corp. v. Santos, G.R.
No. 80298, April 26, 1990).
EXCEPTIONS:
1. Contrary stipulation or Pactum
reservati dominii (contractual
reservation of title) – a stipulation,
usually in sales by installment,
whereby, despite delivery of the
property sold, ownership remains with
the seller until full payment of the price
is made.
2. Contract to sell
4. Advertisements for bidders are simply
invitations to make proposals, and the
advertiser is not bound to accept the highest
or lowest bid, unless the contrary appears.
EARNEST MONEY OR “ARRAS”
something of value to show that the buyer was
really in earnest, and given to the seller to bind
the bargain. It is considered as:
a. part of the purchase price
b. proof of perfection of the contract (Art.
1482)
• Earnest money shall be deducted from the
total price.
• But an option money may become earnest
money if the parties so agree.
Earnest Money and Option Money
Distinguished
Earnest money Option money

3. Contract of insurance – a perfected 1. Title passes to the 1. Ownership is

contract of sale, even without delivery, buyer upon delivery of reserved to the seller
vests in the vendee an equitable title, the thing sold and is not to pass until
an existing interest over the goods full payment
sufficient to be the subject of insurance 2. In case of non- 2. In case of non-
payment, an action payment, there can be
for specific action for specific
RULES GOVERNING AUCTION SALES performance or for performance
1. Sales of separate lots by auction are rescission can be filed
separate contracts of sale. by the injured party
3. Part of the 3. Money given as a
2. Sale is perfected by the fall of the hammer
purchase price distinct consideration
3. Seller has the right to bid in the auction, for an option contract
provided:
4. When given, the 4. The would-be buyer
a. such right was reserved buyer is bound to pay is not required to buy
the balance
b. notice was given that the sale was
subject to a right to bid on behalf of the 5. There is already a 5. Applies to a sale not
seller sale yet perfected
c. right is not prohibited by law or by
stipulation
• to avoid puffing or secret bidding

Rules on Risk of Loss and Deterioration

a. The thing sold is lost before perfection: In the absence of any stipulation:
Seller bears the loss.
FIRST VIEW
b. The thing sold is lost at the time of
Buyer bears the loss as an exception to the
perfection: Contract is void or inexistent.
rule of res perit domino.
c. The thing sold is lost after perfection, but
EXCEPTIONS:
before delivery:
1. when object sold consists of fungible
GENERAL RULE: Who bears the risk of loss
goods for a price fixed according to
is governed by the stipulations in the
weight, number or measure
contract
140
Sales & Lease
if there has been no delivery yet, the
seller bears the loss, unless the buyer is
in mora accipiendi
2. seller is guilty of fraud, negligence,
default or violation of contractual terms
3. object sold is generic (genus nunquam
perit) (Civil Code of the Philippines, Paras)
SECOND VIEW
Where the ownership is transferred by
delivery, the application of the axiom res perit
domino, imposes the risk of loss upon the
vendor; hence, if the thing is lost by fortuitous
event before delivery, the vendor suffers the
Formalities of Contract of Sale
GENERAL RULE: Sale is a consensual contract.
No form is required for its validity. It can be in
writing, by word of mouth, partly in writing and
partly by word of mouth or it can be inferred
from the conduct of the parties (Art. 1483).
EXCEPTIONS: The following must be in writing to
be enforceable:
1. Sale of personal property at a price not
less than P500
GENERAL RULE: All persons who can bind
themselves also have legal capacity to buy
and sell.
EXCEPTIONS:
1. Absolute incapacity (minors, demented
persons, imbeciles, deaf and dumb,
prodigals, civil interdictees)
2. Relative incapacity – incapacity exists
only with reference to certain persons or a
certain class of property
RELATIVE INCAPACITY
A. Husband and wife (Art. 1490): Generally, a
sale by one spouse to another is void.
EXCEPTIONS:
1. Regime of separation of property governs
them
2. A judicial separation of property under
Articles 134 and 135 of the Family Code
has been decreed
• Reason: For the protection of third
person who relying upon supposed
property of either spouse, enters into
a contract with either of them only to
find out that property relied upon was
transferred to another spouse.
MEMORY AID IN CIVIL LAW
loss and cannot recover the price from the
vendee (Commentaries and Jurisprudence on the Civil
Code of the Philippines, Tolentino)
d. The thing is lost after delivery: Buyer bears
the loss.
Effect of Loss at the Time of Sale:
a. Thing entirely lost at the time of perfection:
Contract is void and inexistent
b. Thing only partially lost: Vendee may elect
between withdrawing from the contract or
demanding the remaining part, paying its
proportionate price
2. Sale of real property or an interest therein
3. Sale of property not to be performed within
a year from the date thereof
4. “Applicable statute” requires that the
contract of sale be in a certain form
NOTE: Statute of Frauds is applicable only to
executory contracts and not to contracts which are
totally or partially performed.
Capacity to Buy or Sell
B. Incapacity by reason of relation to
property (Art. 1491)
The following persons cannot acquire
property by purchase, even at a public
auction, either in person or through the
mediation of another: (GAEP-JO)
1. the guardian, with respect to the property
of his ward;
2. agents, with respect to the property
whose administration or sale may have
been entrusted to them, unless the
consent of the principal has been given;
3. executor or administrator, with respect to
the property of the estate under
administration;
4. public officers and employees, with
respect to the properties of the
government, its political subdivisions, or
GOCCs, that are entrusted to them;
5. judges, justices, prosecuting attorneys,
clerks of courts, etc., with respect to the
property in custodia legis; and
6. any other person specially disqualified by
law.
San Beda College of Law
Examples of persons especially disqualified
by law:
1. Aliens who are disqualified to purchase
agricultural lands.
2. An unpaid seller having a right of lien or
having stopped the goods in transitu, who
is prohibited from buying the goods either
directly or indirectly in the resale of the
same, at public or private sale which he
may make.
3. The officer holding the execution, or his
deputy.
NOTE: While those disqualified under Arts.
1490 and 1491 may not become lessees (Art.
1646), still aliens may become lessees even if
they cannot buy lands.
Effect of violation:
a) With respect to nos. 1 to 3: the sale is
VOIDABLE.
Reason: If private rights are violated,
ratification is possible.
OBLIGATIONS OF THE VENDOR
(TDW-TP)
1. Transfer ownership (cannot be waived)
2. Deliver the thing sold (cannot be waived)
3. Warranty against eviction and against hidden
defects (can be waived or modified since
warranty is not an essential element of the
contract of sale)
4. Take care of the thing, pending delivery, with
proper diligence (Art. 1163)
5. Pay for the expenses of the deed of sale,
unless there is stipulation to the contrary
DELIVERY
Is a mode of acquiring ownership, as a
consequence of certain contracts such as sale,
by virtue of which, actually or constructively,
the object is placed in the control and
possession of the vendee.
• Delivery of the thing together with the
payment of the price, marks the
consummation of the contract of sale (PNB
v. Ling, G.R. No. L-26937, October 5, 1927)
• The act of delivery must be coupled with
the intention of delivering the thing and
putting the buyer under control (Norkis
Distributor, Inc. v. CA, G.R. No. 91029, February 7,
1991)
141
2008 CENTRALIZED BAR OPERATIONS
NOTE: In the case of Lao vs. Genato,
G.R. No. L-56451, June 19, 1985 , the
Supreme Court found that the sale by the
administrator of certain properties of the
estate in order to settle the existing
obligations of the estate was made to the
administrator’s son for a grossly low price.
Furthermore, the said sale was not
submitted to the probate court for approval
as mandated by the order authorizing the
administrator to sell. The sale was
indubitably illegal, irregular and fictitious,
and the court’s approval of the assailed
compromise agreement violated Article
1491 and cannot work to ratify a fictitious
contract which is non-existent and void
from the very beginning.
b) With respect to nos. 4 to 6: the sale is
NULL AND VOID.
Reason: violation of public policy cannot
be subject to ratification
NOTE: Prohibitions are applicable to sales
in legal redemption (Art. 1619);
compromises (Art. 2028); and renunciations
(Arts. 6 and 1270)
Consummation
• Parties may stipulate that despite delivery,
the ownership will remain with seller until
the purchaser has fully paid. This
stipulation is usually known as pactum
resarvati domini or contractual reservation
of title
• The execution of a public instrument is
equivalent to delivery. But to be effective, it
is necessary that the vendor have such
control over the thing sold that, at the
moment of the sale, its material delivery
could have been made (Addison v. Felix, G.R.
No. L-12342, April 30, 1939)
Kinds of Delivery:
1. Actual or real – placing the thing under
the control and possession of the buyer.
2. Legal or constructive – delivery is
represented by other signs or acts
indicative thereof
a. delivery by the execution of a public
instrument.
NOTE: Gives rise only to a prima facie
presumption of delivery which is
destroyed when actual delivery is not
effected because of a legal
impediment (Ten Forty Realty v. Cruz, G.R.
No. 151212, September 10, 2003).
b. traditio symbolica - to effect delivery,
the parties make use of a token or
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Sales & Lease
s ymbol to represent the thing
delivered
c. traditio longa manu – seller pointing
out to the buyer the things which are
transferred, which at the time must be
in sight.
d. traditio brevi manu – buyer simply
continues in possession of the thing
but under title of ownership.
e. traditio constitutum possessorium –
seller continues in possession but
under a different title other than
ownership.
3. Quasi-tradition – delivery of rights, credits
or incorporeal property, made by:
a. placing titles of ownership in the
hands of buyer
b. allowing buyer to make use of rights
4. Tradition by operation of law
Constructive delivery requires three things
before ownership may be transferred:
1. The seller must have control over the
thing;
2. The buyer must be put under control;
3. There must be the intention to deliver the
thing for purposes of ownership.
When is the vendor not bound to deliver the
thing sold:
1. If the vendee has not paid him the price
2. If no period for payment has been fixed in
the contract
3. A period for payment has been fixed in the
contract but the vendee has lost the right
to make use of the same.
Transfer of ownership where goods sold
delivered to carrier
GENERAL RULE: Delivery to the carrier is
delivery to the buyer
EXCEPTION: Where the right of possession or
ownership of specific goods sold is
reserved
DELIVERY TO THE CARRIER
GENERAL RULE: Where the seller is authorized
or required to send the goods to the buyer,
delivery to the carrier is delivery to the buyer.
EXCEPTIONS:
1. A contrary intention appears
2. Implied reservation of ownership under
pars. 1,2, and 3 of Art. 1503
Kinds of Delivery to the Carrier
a. C.I.F. (cost, insurance, freight) – signifies
that the price fixed covers not only the
MEMORY AID IN CIVIL LAW
costs of the goods, but the expense of the
freight and the insurance to be paid by the
seller
b. F.O.B. (free on board) – goods are to be
delivered free of expense to the buyer to
the point where they are F.O.B. The point
of F.O.B. (either at the point of shipment or
the point of destination) determines when
the ownership passes.
NOTE: the terms C.I.F. and F.O.B. merely
make rules of presumption
c. C.O.D. (collect on delivery) – the carrier
acts for the seller in collecting the
purchase price, which the buyer must pay
to obtain possession of the goods.
Seller’s Duty after Delivery to Carrier
1. To enter on behalf of buyer into such
contract reasonable under the
circumstances
2. To give notice to buyer regarding necessity
of insuring the goods
Payment of the Purchase Price
GENERAL RULE: The seller is not bound to
deliver the thing sold unless the purchase
price has been paid.
EXCEPTION: The seller is bound to deliver
even if the price has not been paid, if a
period of payment has been fixed.
NOTE: Before a valid and binding contract of
sale can exist, the manner of payment of the
purchase price must first be established, as
such stands as essential to the validity of the
sale. After all, such agreement on the terms of
payment is integral to the element of the price
certain, such that a disagreement on the
manner of payment is tantamount to a failure
to agree on the price (Sps. Edrada v. Sps. Ramos,
G.R. No. 154413, August 31, 2005).
Instances where Seller is still the Owner
despite Delivery:
1. Sale on trial, approval or satisfaction
2. Contrary intention appears
3. Implied reservation of ownership (Art. 1503)
a. If under the bill of lading, the goods are
deliverable to seller or agent or their
order;
b. If the bill of lading, although stating that
the goods are to be delivered to the buyer
or his agent, is kept by the seller or his
agent;
c. When the buyer, although the goods are
deliverable to order of buyer, and
although the bill of lading is given to him,
does not honor the bill of exchange sent
along with it.
San Beda College of Law
S A L E O N T R I A L , A P P R O VA L , O R
SATISFACTION
A contract in the nature of an option to
purchase if the goods prove to be satisfactory,
the approval of the buyer being a condition
precedent.
• Sale which is dependent upon the quality
of goods.
Rules:
1. title remains in the seller
2. risk of loss remains with seller except
when the buyer is at fault or has agreed to
bear the loss
3. buyer must give goods a trial, except
where it is evident that it cannot perform
the work
4. period within which buyer must signify his
acceptance runs only when all the parts
essential for the operation of the object
have been delivered.
5. if it is stipulated that a third person must
satisfy approval or satisfaction, the
provision is valid, but the third person must
be in good faith. If refusal to accept is not
justified, seller may still sue.
6. Generally, the sale and delivery to a buyer
who is an expert on the object purchased
is not a sale on approval, trial, or
satisfaction.
SALE ON RETURN
Property is sold, but the buyer, who becomes the
owner of the property on delivery, has the option
to return the same to the seller instead of paying
the price.
• It is a sale that depends upon the discretion of
the buyer.
NOTES: It is a sale with a condition subsequent.
The buyer must comply with the express or
implied conditions attached to the return
privilege; otherwise, the sale becomes
absolute.
Buyer bears the risk of loss
SALE ON RETURN AND SALE ON TRIAL
DISTINGUISHED
Sale or return Sale on Trial
1. Subject to a resolutory 1. Subject to a
condition suspensive condition
2. Depends entirely on 2. Depends on the
the will of the buyer character or quality of
the goods
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2008 CENTRALIZED BAR OPERATIONS
Sale or return Sale on Trial
3. Ownership passes to 3. Ownership remains
the buyer on delivery in the seller until buyer
and subsequent return signifies his approval
reverts ownership in the or acceptance to the
seller seller
4. Risk of loss or injury 4. Risk of loss remains
rests upon the buyer with the seller
SALE BY DESCRIPTION
A sale where a seller sells a thing as being of a
certain kind, buyer merely relying on the
seller’s representations or descriptions.
• There is warranty that the thing sold
corresponds to the representations or
descriptions.
SALE BY SAMPLE
A sale where a small quantity of a commodity
is exhibited by the seller as a fair specimen of
the bulk, which is not present and as to which
there is no opportunity to inspect or examine.
NOTE: The mere exhibition of the sample
does not necessarily make it a sale by sample.
This exhibition must have been the sole basis
or inducement of the sale.
There is warranty that the bulk of the
commodity will correspond in kind, quality,
and character with the sample exhibited.
In a sale by sample and by description, there is
a two-fold warranty.
Rights of Buyer
1. Return the thing and recover the money
paid, or
2. Retain the thing and sue for the breach of
warranty.
Purchase By Minor
Contract is generally voidable but “where
necessaries are sold and delivered to a minor
or other person without capacity to act, he
must pay a reasonable price therefore.
Necessaries are those in Art. 290.”
RULES ON SALE OF MOVABLES
When Quantity is Less than Agreed Upon :
1. Buyer may reject; or
2. Buyer may accept what has been
delivered, at the contract rate
If buyer was not aware that full delivery
would not be made – FAIR VALUE ONLY
When Quantity is More than Agreed Upon:
1. Buyer may reject all; or
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Sales & Lease
2. Buyer may accept the goods agreed upon
and reject the rest; or
3. Buyer may accept all and must pay for
them at the contract rate
NOTE: There is implied acceptance when the
buyer exercises acts of ownership over the
excess goods.
Rules when Goods Mixed with Goods of
Different Description:
Buyer may accept the goods which are in
accordance with the contract and reject the
rest.
NOTE: If the subject matter is indivisible, in
case of delivery of larger quantity of goods or
of mixed goods, the buyer may reject the
whole of the goods
RULES ON SALE OF IMMOVABLES
Sale of Real Property by Unit
Entire area stated in the contract must be
delivered
When entire area could not be delivered,
vendee may:
1. Enforce the contract with the
corresponding decrease in price
2. Rescind the sale:
a. If the lack in area is at least 1/10 than
that stated or stipulated
b. If the deficiency in quality specified in
the contract exceeds 1/10 of the price
agreed upon
c. If the vendee would not have bought
the immovable had he known of its
smaller area or inferior quality
irrespective of the extent of lack of
area or quality
Sale of Goods by Non-owner
GENERAL RULE: Buyer acquires no title even if
in good faith and for value under the maxim
nemo dat quad non habet
EXCEPTIONS:
1. Owner is estopped or precluded by his
conduct
2. When sale is made by the registered owner or
apparent owner in accordance with recording
or registration laws
3. Sales sanctioned by judicial or statutory
authority
4. Purchases in a merchant's store, fairs or
markets
MEMORY AID IN CIVIL LAW
Sale for a Lump Sum (A Cuerpo Cierto)
Vendor is obligated to deliver all the land
included within the boundaries, regardless of
whether the real area should be greater or
smaller
Ordinarily, there can be no rescission or
reduction or increase whether the area be
greater or lesser, unless there is gross
mistake.
NOTE: The Civil Code presumes that the
purchaser had in mind a particular piece of
land and that he ascertained its area and
quality before the contract of sale was
perfected. If he did not do so, or if having done
so he made no objection and consented to the
transaction, he can blame no one but himself
(Teran v. Villanueva Viuda de Riosa, 56 Phil 677).
PLACE OF DELIVERY OF GOODS
1. The place of delivery agreed upon
2. Where there is no agreement, place
determined by usage of trade
3. Where there is no agreement and no
prevalent usage, the seller’s place
4. In any other case, place of delivery is the
seller’s residence
5. In case of specific goods, which is known by
the parties at some place at the time of the
perfection of sale, that place is the place of
delivery, in the absence of agreement or
usage of trade to the contrary
TIME OF DELIVERY OF GOODS
1. Stipulated time
2. In the absence thereof, within a reasonable
time
5. When a person who is not the owner sells and
delivers a thing, subsequently acquires title
thereto (Art. 1434)
6. When the seller has a voidable title which has
not been avoided at the time of the sale (Art.
1506)
7. Sale by co-owner of whole property or a
definite portion thereof
8. Special rights of unpaid seller (Arts. 1526-1533)
• “Unlawful deprivation” is no longer limited to a
criminal act.
• There is unlawful deprivation where there is
no valid transmission of ownership.
San Beda College of Law 145
2008 CENTRALIZED BAR OPERATIONS

Negotiable Document of Title (NDT)

A document of title which states that the goods
referred to therein will be delivered to the bearer,
or to the order of any person named in such
document.
• Negotiable by delivery or indorsement.
Document is negotiable if goods are:
1. Deliverable to the bearer; or
2. Deliverable to the order of a certain person
(Art. 1507)
Persons who may negotiate NDT:
Rights of Person to Whom Document has been
Negotiated:
1. The title of the person negotiating the
document, over the goods covered by the
document;
2. The title of the person (depositor or owner)
to whose order by the terms of the
document the goods were to be delivered,
over such goods;
3. The direct obligation of the bailee to hold
possession of the goods for him, as if the
bailee had contracted to him directly

1. The owner; or NOTE: For a mere transferee to acquire right

#3 he must notify the bailee (Art. 1513).
2. Any person to whom the possession or
custody thereof has been entrusted by the Warranties:
owner, if by the terms of the document the 1. That the document is genuine;
bailee issuing the document undertakes to
deliver the goods to the order of the 2. That he has a legal right to negotiate or
person to whom the possession or custody transfer it;
of the document has been entrusted or if 3. That he has knowledge of no fact which
at the time of such entrusting the would impair the validity or worth of the
document in such form that it may be document; and
negotiated by delivery (Art. 1512).
4. That he has a right to transfer the title to
NOTE: If the holder of a BEARER negotiable the goods and that the goods are
document of title entrusts the document to a merchantable or fit for a particular purpose
friend for deposit, but the friend betrays the (Art. 1516).
trust and negotiates the document by
Who can Defeat Rights of Transferee:
delivering it to another who is in good faith, the
said owner cannot impugn the validity of the 1. Creditor of transferor
negotiation. As between two innocent persons, 2. Transferor
he who made the loss possible shall bear the
loss, without prejudice to his right to recover 3. Subsequent purchaser
from the wrongdoer.

Double Sale (Art. 1544)

Requisites: (VOSC)
1. two or more transactions must constitute
valid sales;
2. they must pertain exactly to the same
object or subject matter;
3. they must be bought from the same or
immediate seller; AND
4. two or more buyers who are at odds over
the rightful ownership of the subject matter
must represent conflicting interests.
! If not all the elements are present for Art.
1544 to apply, the principle of prior
tempore, potior jure or simply “he who
is first in time is preferred in right”
should apply. Indisputably, he is a
purchaser in good faith because at the
time he bought the real property, there
was still no sale to as second vendee
[Consolidated Rural Bank (Cagayan Valley) v. CA,
G.R. No. 13216, January 17, 2005].
Rules of preference:
1. Personal Property
• first possessor in good faith
2. Real Property
a. first registrant in good faith
b. first possessor in good faith
c. person with oldest title in good faith
(Martinez v. CA, GR No. 123547, May 21,
2001)
NOTES:
Purchaser in Good Faith - one who buys the
property of another without notice that some
other person has a right to or interest in such
property and pays a full and fair price for the
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Sales & Lease
same at the time of such purchase or before
he has notice of the claim or interest of some
other person in the property
The second buyer must register the
document in good faith, otherwise, he does not
have a better right (Fudot v. Cattleya Land Inc., GR
No. 175942, September 13, 2007)
GENERAL RULE: A purchaser maybe considered
a purchaser in good faith if he has examined
the latest certificate of title.
EXCEPTION: When there exist important facts
that would create suspicion in an otherwise
reasonable man to go beyond the present title
and to investigate those that preceded it.
(Amancio et al. vs. CA et. Al., G.R. No. 152627,
September 16, 2005; Mercado v. Allied Bank, GR No
171460, July 27, 2007)
• Registration requires actual recording; if the
property was never really registered as when
the registrar forgot to do so although he has
been handed the document, there is no
registration.
• With respect to banks the rule that persons
dealing with registered lands can rely solely
on the certificate does not apply to banks
because their business is one affected with
public interest keeping in trust the money
belonging to their depositors (Amancio v. CA, GR
No. 152627, September 16, 2005).
CONDITION
An uncertain event or contingency on the
happening of which the obligation or right of
the contract depends.
Effect of Non-fulfillment of Condition
1. The other party may:
a. refuse to proceed with the contract or
b. proceed with the contract , waiving the
performance of the condition.
2. If the condition is in the nature of a
promise that it should happen, the non-
performance of such condition may be
treated by the other party as breach of
warranty.
NOTE: A distinction must be made between a
condition imposed on the perfection of a
contract and a condition imposed merely on
the performance of an obligation. The failure to
comply with the first condition would prevent
the juridical relation itself from coming into
existence. While failure to comply with the
second merely gives the option either to refuse
or proceed with the sale or to waive the
condition.
MEMORY AID IN CIVIL LAW
NOTE: Good faith must concur with registration.
To be entitled to priority, the second purchaser
must not only establish prior recording of his deed,
but must have acted in good faith (Gabriel v. Mabanta,
GR No. 142403, March 26, 2003).
Possession is either actual or constructive (Sanchez
v. Ramos. 40 Phil 614).
Possession in Art. 1544 is either material or
symbolic (Ten Forty Realty v. Cruz G.R. No. 151212,
September 10, 2003).
Title means title because of sale, and not any
other title (Lichauco v. Berenguer G.R. No. L-5933,
August 25, 1911 ).
Hernandez v. Katigbak Rule: When the property
sold on execution is with Torrens title,
registration is the operative act that gives
validity to the transfer or creates a lien on the
land. A purchaser on execution sale is not
required to go behind the registry to determine
the conditions of the property.
Exception: Where the purchaser had
knowledge, prior to or at the time of the levy, of
such previous lien or encumbrance, his
knowledge is equivalent to registration.
There is no double sale if the same property is
sold by two different persons (Sps. Salera v. Sps.
Rodaje, GR No. 135900, August 17, 2007).
Conditions and Warranties
The fact that the second contract of sale
was perfected in good faith is not sufficient if,
before title passes, the second vendee
acquires knowledge of the first transaction.
The good faith or innocence of the later
vendee needs to continue until his contract
ripens into ownership by tradition or
registration (Palanca v. Dir. Of Lands, GR No.
15950, March 9, 1922).
Effect if the buyer has already sold the goods
GENERAL RULE: The unpaid seller’s right to
lien or stoppage in transitu remains even if
buyer has sold the goods.
EXCEPTIONS:
1. When the seller has given consent
thereto, or
2. When the buyer is a purchaser in good
faith for value of a negotiable
document of title.
San Beda College of Law 147
2008 CENTRALIZED BAR OPERATIONS

WARRANTY AND CONDITION DISTINGUISHED article. But such articles might be sold under
such circumstances as to raise an implied
Warranty Condition warranty. Thus, a certification issued by a
1. goes into the 1. goes into the root of vendor that a second-hand machine was in
performance of such the existence of the A-1 condition is an express warranty binding
obligation and in fact obligation on the vendor (Moles v. IAC. G.R. No. 73913,
may constitute an January 31, 1981).
obligation in itself
2. may form part of the 2. must be stipulated by
obligation or contract the parties in order to A.
by provision of the law form part of an obligation WARRANTY AGAINST EVICTION
without the parties The seller guarantees that he has the right to
having agreed thereto sell the thing sold and to transfer ownership to
3. whether express or 3. may attach itself either the buyer, who shall not be disturbed in his
implied relates to the to the obligation of the legal and peaceful possession thereof.
subject matter itself or seller to deliver Elements:
to the obligations of possession and transfer
the seller as to the ownership over the 1. Vendee is deprived, in whole or in part, of
subject matter of the subject matter of the the thing purchased;
sale sale 2. The deprivation is by virtue of a final
judgment;
3. The judgment is based on a prior right to
WARRANTY
the sale or an act imputable to the vendor;
a statement or representation made by the 4. The vendor was summoned in the suit for
seller contemporaneously and as a part of the Eviction at the instance of the vendee;
contract of sale, having reference to the AND
character, quality, or title of the goods, and by
which he promises or undertakes to insure that 5. No waiver of warranty by the vendee.
certain facts are or shall be as he then Vendor's liability shall consist of:
represents.
1. Total eviction: (VICED)
Kinds:
a. Value of the thing at the time of
1. EXPRESS – any affirmation of fact or any eviction;
promise by the seller relating to the thing,
which induces the buyer to purchase the b. Income or fruits if he has been
same and if the buyer purchases the thing ordered to deliver them to the party
relying thereon who won the suit;

NOTE: A mere expression of opinion, no c. Costs of the suit;

matter how positively asserted, does
import a warranty unless the seller is
expert and his opinion was relied upon by
buyer.
2. IMPLIED - that which the law derives from
the nature of the transaction or the relative
situation or circumstances of the parties,
irrespective of any intention of the seller to
create it.
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty as to Fitness and
Merchantability
NOTE: An implied warranty is a natural, not
an essential element of a contract, and is
deemed incorporated in the contract of sale. It
may however be waived or modified by
express stipulation.
There is no implied warranty as to the
condition, adaptation, fitness or suitability or
the quality of an article sold as a second-hand
not d. Expenses of the contract; AND
an
e. Damages and interests if the sale was
the
in bad faith.
2. Partial eviction:
a. to enforce vendor’s liability for eviction
(VICED); OR
b. to demand rescission of contract.
NOTE: Rescission is not a remedy in case of
eviction because rescission contemplates that
the one demanding it is able to return whatever
he has received under the contract. Since the
vendee can no longer restore the subject-
matter of the sale to the vendor, rescission
cannot be carried out.
The suit for the breach can be directed only
against the immediate seller, unless the
sellers of the seller had promised to
warrant in favor of later buyers or the
immediate seller has expressly assigned to
the buyer his own right to sue his own
seller.
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Sales & Lease
The disturbance referred to in the case of
eviction is a disturbance in law which
requires that a person go to the courts of
justice claiming the thing sold, or part
thereof and invoking reasons.
Mere trespass in fact does not give rise to the
application of the doctrine of eviction.
Vendor’s liability is waivable but any stipulation
exempting the vendor from the obligation to
answer for eviction shall be void if he acted
in bad faith.
Kinds of Waiver:
a. Consciente – voluntarily made by the
vendee without the knowledge and
assumption of the risks of eviction
NOTE: vendor shall pay only the value
which the thing sold had at the time of
eviction
b. Intencionada – made by the vendee with
knowledge of the risks of eviction and
assumption of its consequences
EFFECT: vendor not liable
NOTE: Every waiver is presumed to be
consciente. To consider it intencionada, it must
be accompanied by some circumstance which
reveals the vendor’s knowledge of the risks of
eviction and his intention to submit to such
consequences.
Where Immovable Sold Encumbered with Non-
Apparent Burden
1. Right of vendee
a. rescission, or
b. indemnity
2. When right cannot be exercised:
a. if the non-apparent burden or
servitude is registered
b. if vendee had knowledge of the
encumbrance, whether it is registered
or not
• Action must be brought within ONE YEAR
from the execution of the deed of sale
B.
WARRANTY AGAINST HIDDEN DEFECTS
Warranty in which the seller guarantees that
the thing sold is free from any hidden faults or
defects or any charge or encumbrance not
declared or known to the buyer.
Elements: (SHENPW)
1. defect is serious or important;
2. defect is hidden;
3. exists at the time of the sale;
MEMORY AID IN CIVIL LAW
4. vendee must give notice of the defect to
the vendor within a reasonable time;
5. remedies must be brought within the
period of 6 mos. from delivery of the thing
or 40 days from date of delivery in case of
animals; and
6. no waiver of the warranty.
Remedies of the Vendee:
a. Accion redhibitoria (rescission)
b. Accion quanti minoris (reduction of the
price)
NOTES: Hidden faults or defects pertain only
to those that make the object unfit for the use
for which it was intended at the time of the
sale.
This warranty in Sales is applicable in
Lease (Yap Kim Chuan v. Tiaoqui, GR No. 1006,
September 18, 1915).
Effect of loss of thing on account of hidden
defects:
1. If vendor was aware of hidden defects, he
shall bear the loss and vendee shall have
the right to recover: (PED)
a. the price paid
b. expenses of the contract
c. damages
2. If vendor was not aware, he shall be
obliged to return: (PIE)
a. price paid
b. interest thereon
c. expenses of the contract if paid by the
vendee
Effect if the cause of loss was not the hidden
defect
1. If the thing sold had any hidden fault at the
time of the sale should thereafter be lost
by a (1) fortuitous event OR (2) through
the fault of the vendee, the vendee may
demand of the vendor the price which he
paid less the value of the thing at the time
of its loss.
NOTE: The difference between the price
paid and the value of the thing at the time
of its loss represents the damage suffered
by the vendee and the amount which the
vendor enriched himself at the expense of
the vendee.
2. If the vendor acted in bad faith, vendor
shall pay damages to the vendee
San Beda College of Law
C.
IMPLIED WARRANTIES OF QUALITY
WARRANTY OF FITNESS
the seller guarantees that the thing sold is
reasonably fit for the known particular purpose
for which it was acquired by the buyer
• This warranty exists in the following
instances:
1. Where the buyer, expressly or by
implication manifests to the seller the
particular purpose for which the goods
are required
2. Where the buyer relies upon the seller’s
skill or judgment
WARRANTY OF MERCHANTABILITY
the seller guarantees, where the goods were
bought by description, that they are reasonably fit
for the general purpose for which they are sold
• It requires identity between what is described
in the contract AND what is tendered, in the
sense that the latter is of such quality and
value
Instances where implied warranties are
inapplicable:
1. As is and where is sale – vendor makes no
warranty as to the quality or workable
condition of the goods, and that the vendee
takes them in the condition in which they are
found and from the place where they are
located.
2. Sale of second-hand articles
3. Sale by virtue of authority in fact or law
CAVEAT VENDITOR (“LET THE SELLER BEWARE”)
the vendor is liable to the vendee for any hidden
faults or defects in the thing sold, even though he
was not aware thereof.
CAVEAT EMPTOR (“LET THE BUYER BEWARE”)
requires the purchaser to be aware of the
supposed title of the vendor and one who buys
without checking the vendor’s title takes all the
risks and losses consequent to such failure.
PRINCIPAL OBLIGATIONS:
1. To accept delivery
2. To pay the price of the thing sold in legal
tender unless another mode has been
agreed upon
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MIRROR DOCTRINE
It is a well settled rule that every person dealing
with registered land may safely rely on the
correctness of the certificate of title issued
therefore and the law will in no way oblige him to
go beyond the certificate to determine the
condition of the property. Where there is nothing in
the certificate of title to indicate any cloud or vice
in the ownership of the property, or any
encumbrance thereon, the purchaser is not
required to explore further than what the Torrens
Title upon its face indicates in quest for any
hidden defects or inchoate right that may
subsequently defeat his right thereto. However,
this rule shall not apply when the party has actual
knowledge of facts and circumstances that would
impel a reasonably cautious man to make such
inquiry or when the purchaser has knowledge of a
defect or the lack of title in his vendor or of
sufficient facts to induce a reasonably prudent
man to inquire into the status of the title of the
property in litigation (Sigaya v. Mayuga, G.R. No. 143254,
August 18, 2005).
Rule in Case of Sale of Animals
1. When two or more animals have been sold at
the same time and the redhibitory defect is in
one, or some of them but not in all, the
general rule is that the redhibition will not
affect the others without it. It is immaterial
whether the price has been fixed for a lump
sum for all the animals or for a separate price
for each.
2. No warranty against hidden defects of
animals sold at fairs or at public auctions, or
of livestock sold as condemned.
3. Sale of animals shall be void when:
a. animals sold are suffering from
contagious disease
b. if they are found to be unfit for the
purpose for which they were bought as
stated in the contract
4. The action must be brought within 40 days
from the date of their delivery to the vendee
5. Vendor shall be liable if the animal should die
within 3 days after its purchase if the disease
which caused the death existed at the time of
the contract
Obligations of the Vendee
NOTE: A grace period granted the vendee in
case of failure to pay the amount/s due is a
right not an obligation. The grace period must
not be likened to an obligation, the
nonpayment of which, under Article 1169 of
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Sales & Lease
the Civil Code, would still generally require
judicial or extra-judicial demand before
“default” can be said to arise (Bricktown Dev’t.
Corp. v. Amor Tierra Dev’t. Corp., G.R. No. 112182,
December 12, 1994).
OTHER OBLIGATIONS
1. To take care of the goods without the
obligation to return, where the goods are
delivered to the buyer and he rightfully
refuses to accept
NOTES: The buyer in such a case is in
the position of a bailee who has had
goods thrust upon him without his assent.
He has the obligation to take reasonable
care of the goods but nothing more can
be demanded of him.
The goods in the buyer’s possession
under these circumstances are at the
seller’s risk.
2. To be liable as a depositary if he
voluntarily constituted himself as such
3. To pay interest for the period between
delivery of the thing and the payment of
the price in the following cases:
a. Should it have been stipulated
b. Should the thing sold and delivered
produce fruits or income
c. Should he be in default, from the time of
judicial or extra-judicial demand for the
payment of the price
Pertinent Rules:
1. The vendor is not required to deliver the
thing sold until the price is paid nor the
vendee to pay the price before the thing is
delivered in the absence of an agreement
to the contrary (Art. 1524);
2. If stipulated, the vendee is bound to
accept delivery and to pay the price at the
time and place designated;
3. If there is no stipulation as to the time and
place of payment and delivery, the vendee
is bound to pay at the time and place of
delivery;
4. In the absence of stipulation as to the
place of delivery, it shall be made
wherever the thing might be at the
moment the contract was perfected (Art.
1251); or
5. If only the time of delivery has been fixed
in the contract, the vendee is required to
pay even before the thing is delivered to
him; if only the time of payment has been
fixed, the vendee is entitled to delivery
even before the price is paid by him.
Ways of accepting goods:
1. Express acceptance
MEMORY AID IN CIVIL LAW
2. Implied acceptance
a. When buyer performs acts of
ownership
b. Failure to return goods after
reasonable lapse of time
NOTES: Acceptance cannot be regarded as a
condition to complete delivery
Acceptance by the buyer may precede actual
delivery; there may be actual receipt
without acceptance and there may be
acceptance without receipt
Unless otherwise agreed upon, acceptance of
the goods by the buyer does not discharge
the seller from liability for damages or other
legal remedy like for breach of any promise
or warranty
When vendee may suspend payment of the
price (Art. 1950):
1. If he is disturbed in the possession or
ownership of the thing bought
2. If he has well-grounded fear that his
possession or ownership would be
disturbed by a vindicatory action or
foreclosure of mortgage
NOTES: Article 1590, presupposes that the
price or any part thereof has not yet been paid
and the contract is not yet consummated.
Under Article 1590, the vendee has no cause
of action for rescission before final
judgment, otherwise the vendor might
become a victim of machinations between
the vendee and the third person.
Disturbance must be in possession and
ownership of the thing acquired.
If the disturbance is caused by the existence of
non-apparent servitude, the remedy of the
buyer is rescission, not suspension of
payment.
When vendee cannot suspend payment of the
price:
1. if the vendor gives security for the return of
the price in a proper case
2. if it has been stipulated that
notwithstanding any such contingency, the
vendee must make payment (see Art. 1548
par. 3)
3. if the vendor has caused the disturbance
or danger to cease
4. if the disturbance is a mere act of trespass
5. if the vendee has fully paid the price
San Beda College of Law 151
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Remedies for Breach of Conduct

A. Remedies of the seller ARTICLE 1484 OR RECTO LAW
1. Action for payment of the price (Art. 1595) REMEDIES OF VENDOR IN SALE OF PERSONAL
PROPERTY BY INSTALLMENTS
2. Action for damages for non-acceptance of
the goods (Art. 1596) Requisites:

3. Action for rescission (Art. 1597) a. Contract of sale

B. Remedies of the buyer b. Personal property

1. Action for specific performance (Art. 1598) c. Payable in installments

2. Action for rescission or damages for d. In the case of the second and third
breach of warranty (Art 1599) remedies, that there has been a failure to
pay two or more installments
NOTE: Rules and limits apply to contracts
REMEDIES OF THE SELLER FOR purporting to be leases of personal property
BREACH OF CONTRACT with option to buy
Art. 1484 does not apply to a sale:

IN CASE OF MOVABLES a. Payable on straight terms (partly in cash

ORDINARY REMEDIES
a. Movables in General – Failure of the vendee
to receive delivery or, having appeared, failure
to tender the price at the same time, unless, a
longer period for its payment has been
stipulated
• action to rescind the sale (Art. 1593)
b. Sale of Goods –
• action for the price (Art. 1595)
• action for damages (Art. 1596)
UNPAID SELLER
Types:
a. The seller who has not been paid or to
whom the price has not been tendered
b. The seller of the goods, in case a bill of
exchange or other negotiable instrument
has been received as conditional payment,
AND the condition on which it was
received has been broken by reason of the
dishonor of the instrument, insolvency of
the buyer or otherwise.
Remedies:
a. Possessory lien over the goods
b. Right of stoppage in transitu after he has
parted with the possession of the goods
and the buyer becomes insolvent
and partly in one term)
b. Of Real property
c. Action for replevin
Remedies:
a. Specific performance upon vendee’s failure to
pay
It is a settled rule that in sales on
installments , where the action instituted is for
specific performance and the mortgaged
property is subsequently attached and sold,
the sale thereof does not amount to a
foreclosure of the mortgage, hence, the seller-
creditor is entitled to deficiency judgment
(Southern Motors Inc. v. Moscoso, G.R. No. L-14475,
May 30, 1961).
b. Rescission of the sale if vendee shall have
failed to pay two or more installments
NOTES: This requires mutual restitution and
bars further action on the purchase price
(Nonato v. IAC, G.R. No. L-67181, November 22,
1985)
GENERAL RULE: All partial payments of
price or rents must be returned.
EXCEPTION: If there is a contrary stipulation
which is not unconscionable (Art. 1486).
c. Foreclosure of the chattel mortgage on the
thing sold if vendee shall have failed to pay
two or more installments. In this case, there
shall be no deficiency judgment.

c. Special Right of resale NOTES: Further recovery barred only from

the time of actual sale at public auction
d. Special Right to rescind the sale conducted pursuant to foreclosure
e. Action for the price Other chattels given as security cannot be
f. Action for damages foreclosed if they are not subject of the
installment sale (Ridad v. Filipinas Investment
and Finance Corp. GR 39806, January. 28, 1983)
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Sales & Lease
When the vendor assigns his credit to another
person, the latter is likewise bound by the
same law (Borbon II v. Servicewide Specialist, Inc.,
G.R. No. 106418, July 11, 1996 ).
Guarantor may not be compelled to pay the
balance of the purchase price as
ultimately it will be the vendee who will be
made to bear the payment of the balance
of the price, despite the earlier
foreclosure of the chattel given by him
(Pascual v. Universal Motors Corp., 61 SCRA 121)
Under the law, in sale on installment of
movable, if the vendor has availed
himself of the right to purchase to recover
the unpaid balance of the purchase price.
Any agreement to the contrary is void. In
other words, in all proceedings for the
foreclosure of the chattel mortgage
executed over the chattel which has been
sold on installment, the mortgage, is
limited to the property included in the
mortgage. The scheme adopted by the
seller of asking for foreclosure ad the
payment of the unpaid balance is a
flagrant circumvention of the prohibition of
the law. By praying for the foreclosure of
the mortgage over the thing, it renounced
whatever claim it may have under the
promissory note. It is intended to prevent
any abuses committed by mortgagees
from signing the mortgaged property,
suing it at foreclosure sale for a low price
and then bringing a suit against a
mortgagor for a deficiency judgment. The
almost invariable result of this procedure
is that, the mortgagor is found minus the
property and still owing practically the full
amount of his original indebtedness
(Magna Financial Services Group, Inc. v. Colorina,
G.R. No. 158635, December 9, 2005).
However, Article 1484(3) does NOT bar one
to whom the vendor has assigned on with
a recourse basis his credit against the
vendee from recovering from the
vendor the assigned credit in full
although the vendor may have no right of
recovery against the vendee for the
deficiency (Filipinas Invest. & Finance Corp. v.
Vitug, Jr., G.R. No. L-25951, June 30, 1969)
NOTE: Remedies are alternative and exclusive
IN CASE OF IMMOVABLES
ORDINARY REMEDIES
a. In case of anticipatory breach – rescission
(Art. 1591) Vendor has a reasonable ground
to fear loss of immovable property sold and its
price
b. Failure to pay the purchase price
• rescission upon judicial or notarial
demand for rescission (Art. 1592)
MEMORY AID IN CIVIL LAW
• the vendee may pay, even after the
expiration of the period, as long as no
demand for rescission has been made
upon him
• offer to pay prior to the demand for
rescission is sufficient (Ocampo v. CA 52
SCAD 610)
NOTE: Article 1592 does not apply to:
1) Sale on installment of real estate
2) Contract to sell
3) Conditional sale
4) Cases covered by RA 6552: Realty
Installment buyer protection act
R.A. NO. 6552 OR MACEDA LAW governs the
sale or financing of real estate on installment
payments
• An Act to Provide Protection to Buyers of
Real Estate on Installment Payments
• The Act excludes from its operation sales
on installment of industrial lots,
commercial buildings and sales to tenants
under code of Agrarian reform
Requisites:
a. Transactions or contracts involving the
sale OR financing of real estate on
installment payments, including residential
condominium apartments; and
b. Buyer defaults in payment of succeeding
installments.
RIGHTS OF THE BUYER
A. If Buyer has paid at LEAST TWO (2) years
of installments
1. The buyer must pay, without additional
interest, the unpaid installments due within
the total grace period earned by him.
There shall be one (1) month grace period
for every one (1) year of installment
payments made
NOTE: This right shall be exercised by the
buyer ONLY once in every 5 years of the
life of the contract AND its extensions
2. Actual cancellation can only take place
after 30 days from receipt by the buyer of
the notice of cancellation OR demand for
rescission by a notarial act AND upon full
payment of the cash surrender value to
the buyer (Olympia Housing v. Panasiatic, G.R. No.
140468, January 16, 2003)
NOTE: The seller shall refund to the buyer
the cash surrender value of the payments
on the property equivalent to 50% of the
total payments made. After five (5) years
of installments, there shall be an additional
San Beda College of Law
5% every year but not to exceed 90% of
the total payments made
3. The buyer shall have the right to sell his
rights or assign the same to another
person OR to reinstate the contract by
updating the account during the grace
period and before actual cancellation of
the contract
4. The buyer shall have the right to pay in
advance any installment or the full unpaid
balance of the purchase price any time
without interest and to have such full
payment of the purchase price annotated
in the certificate of title covering the
B. Stoppage of goods in transitu
property.
B. If Buyer has paid LESS THAN TWO (2)
years of installments
3. The seller shall give the buyer a grace
period of NOT less than 60 days from the
date the installment became due. If the
buyer fails to pay the installments due at
the expiration of the grace period, the
seller may cancel the contract after 30
days from receipt by the buyer of the
notice of cancellation or the demand for
rescission of contract by a notarial act.
4. Same No. 3 and 4 paragraph A above
NOTE: Down payments, deposits or options
on the contract shall be included in the
computation of the total number of installment
payments made
REMEDIES OF UNPAID SELLER
1. Possessory lien
2. Stoppage of goods in transitu
3. Special right of resale
4. Special right of rescission
5. Action for the price
6. Action for damages
A. Possessory Lien
When may be exercised:
1. the goods have been sold without any
stipulation as to credit
2. the goods have been sold on credit,
but the term of credit has expired
3. the buyer becomes insolvent
When lost:
1. Delivery of the goods to a carrier or
bailee for the purpose of transmission
to the buyer without reserving
ownership or right of possession
2. When the buyer lawfully obtains
possession of the goods
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2008 CENTRALIZED BAR OPERATIONS
3. By waiver of the lien
NOTE: Possessory lien is lost after the seller
loses possession but his lien as an unpaid
seller remains. His preference can only be
defeated by the government’s claim to the
specific tax on the goods themselves (Arts. 2247
and 2241).
The bringing of an action to recover the
purchase price is not one of the ways of losing
the possessory lien. An unpaid seller does not
lose his lien by reason that he has obtained a
money judgement or decree for the price of
goods (Art. 1529, last paragraph).
Requisites: (UTI BES)
1. Seller must be unpaid
2. Buyer must be insolvent
3. Goods must be in transit
4. Seller must either:
a. actually take possession of the
goods sold OR
b. give notice of his claim to the
carrier or other person in
possession
5. Seller must surrender the negotiable
document of title, if any, issued by the
carrier or bailee
6. Seller must bear the expenses of
delivery of the goods after the exercise
of the right
Goods are Considered in transitu:
1. after delivery to a carrier or other bailee
and before the buyer or his agent takes
delivery of them; and
2. if the goods are rejected by the buyer,
and the carrier or other bailee
continues in possession of them
Goods are No Longer Considered in
transitu:
1. after delivery to the buyer or his agent
in that behalf;
2. if the buyer or his agent obtains
possession of the goods at a point
before the destination originally fixed;
3. if the carrier or the bailee
acknowledges to hold the goods in
behalf of the buyer; and
4. if the carrier or bailee wrongfully
refuses to deliver the goods to the
buyer
Effects of the exercise of the right
1. The goods are no longer in transit.
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Sales & Lease
2. The contract of carriage ends; instead
the carrier now becomes a mere
bailee, and will be liable as such.
3. The carrier should not deliver anymore
to the buyer or the latter’s agent;
otherwise he will clearly be liable for
damages.
4. The carrier must redeliver to, or
according to the directions of the seller.
Ways of Exercising the Right to Stop:
1. By taking actual possession of the
goods
2. By giving notice of his claim to the
carrier or bailee
C. Special Right of Resale
May be exercised only when the unpaid seller
has either a right of lien OR has stopped the
goods in transitu AND under ANY of the
following conditions:
4. the goods are perishable in nature
5. the right to resell is expressly reserved in
case the buyer should make a default
6. the buyer delays in the payment of the
price for an unreasonable time
D. Rescission
Types:
5. Special Right to Rescind Under Art. 1534
– If the seller has either the right of lien
OR a right to stop the goods in transitu
AND under either of 2 situations:
a. Where the right to rescind on default
has been expressly reserved
b. Where the buyer has been in default
for an unreasonable time
8. Under Art. 1597 (“technical rescission”)
E. Action for the price
When may be exercised:
1. Where the ownership has passed to the
buyer AND he wrongfully neglects OR
refuses to pay for the price
2. Where the price is payable on a day
certain AND he wrongfully neglects OR
refuses to pay for the price, irrespective of
the delivery or transfer of title
3. Where the goods cannot readily be resold
for a reasonable price AND the buyer
wrongfully refuses to accept them even
before the ownership of the goods has
passed, if Article 1596 is inapplicable.
F. Action for damages
When may be exercised:
1. In case of wrongful neglect or refusal by
the buyer to accept or pay for the thing
sold (Art. 1596, par. 1)
MEMORY AID IN CIVIL LAW
2. In an executory contract, where the
ownership in the goods has not passed,
and the seller cannot maintain an action to
recover the price (Art. 1595)
3. If the goods are not yet identified at the
time of the contract or subsequently
REMEDIES OF THE BUYER FOR
BREACH OF CONTRACT
1. Action for specific performance (Art. 1598)
Where the seller has broken the contract to
deliver specific or ascertained goods
The judgment or decree may be
unconditional, or upon such terms and
conditions as to damages, payment of the
price and otherwise as the court may
deem just
2. Remedies of buyer for breach of warranty
by seller (Art. 1599):
1. Recoupment – accept the goods and set
up the seller’s breach to reduce or
extinguish the price
2. Accept the goods and maintain an action
for damages for breach of warranty
3. Refuse to accept the goods and maintain
an action for damages for breach of
warranty
4. Rescind the contract by returning or
offering the return of the goods, and
recover the price of any part thereof
NOTE: These are alternative remedies.
In Ramil, et. al. vs. Aquino, et. al., G.R. No.
133208, July 31, 2006, there was a contract of
sale over a parcel of land. In connection
thereto, there was a complaint for specific
performance for the seller to comply with the
terms of the same but in the answer, they
alleged as defense rescission. The buyer
contented that the seller cannot exercise it
because there was no demand for rescission.
The Supreme Court brushed aside the
contention because the cross-claim found in
the answer filed in the trial court constitutes
judicial demand for rescission that satisfies the
requirements of Article 1592.
When rescission by buyer not allowed:
1. if the buyer accepted the goods knowing
of the breach of warranty without protest
2. if he fails to notify the seller within a
reasonable time of his election to rescind
3. if he fails to return or offer to return the
goods in substantially as good condition
as they were in at the time of the transfer
of ownership to him
San Beda College of Law 155
2008 CENTRALIZED BAR OPERATIONS

Rights and Obligations of buyer in case of
rescission
1. Buyer shall cease to be liable for the price,
his only obligation being to return the
goods;
2. If he has paid the price or any part thereof,
he may recover it from the seller;
3. He has the right to hold the goods as
bailee for the seller should the latter refuse
the return of the goods; and
4. He has a right to have a lien on the goods
for any portion of the price already paid
which lien he may enforce as if he were an
unpaid seller.

Extinguishment of Sale
1. Same causes as in all other obligations 5. Vendor binds himself to pay the taxes of
the thing sold;
2. Conventional Redemption
6. Any other case where the parties really
3. Legal Redemption
intended that the transaction should
secure the payment of a debt or the
performance of any obligation; or
A.
CONVENTIONAL REDEMPTION 7. When there is doubt as to whether
contract is contract of sale with right of
The right which the vendor reserves to himself, to repurchase or an equitable mortgage (Art.
reacquire the property sold provided he returns to 1602).
the vendee:
a. the price of the sale;
EQUITABLE MORTGAGE
b. expenses of the contract;
One which lacks the proper formalities, form of
c. any other legitimate payments made
words, or other requisites prescribed by law for a
therefore and;
mortgage, but shows the intention of the parties to
d. the necessary and useful expenses made make the property subject of the contract as
on the thing sold; and security for a debt and contains nothing
impossible or contrary to law (Cachola v. CA. G.R. No.
e. fulfills other stipulations which may have
97822, May 7, 1992)
been agreed upon.
NOTE: In the cases referred to in Arts. 1602 and
Nature of Conventional Redemption
(CARP RPM OR) 1604, the apparent vendor may ask for the
reformation of the instrument.
a. Purely contractual
b. Accidental
Remedy of Reformation
c. Real right
to correct the instrument so as to make it
d. Potestative express the true intent of the parties.
e. Resolutory condition Redemption Period
f. Power or privilege a. if there is an agreement: period agreed
g. reserved at the moment of the perfection upon cannot exceed 10 years
of contract b. if no agreement as to the period: 4 years
h. the person entitled to exercise is from the date of the contract
necessarily the owner c. the vendor who fails to repurchase the
i. gives reciprocal obligation property within the period agreed upon
may, however, exercise the right to
A sale with conventional redemption is repurchase within 30 days FROM the time
deemed to be an equitable mortgage in any of final judgment was rendered in a civil
the following cases: (IPERTOD) action on the basis that the contract was a
1. Unusually inadequate purchase price; true sale with right of repurchase
2. Possession by the vendor remains, as • This refers to cases involving a
lessee or otherwise; transaction where one of the parties
contests or denies that the true
3. Extension of redemption period after
agreement is one of sale with right to
expiration;
repurchase; not to cases where the
4. Retention by the vendee of part of the transaction is conclusively a pacto de
purchase price; retro sale (Felicen v. Orias, GR No. L-33182,
156 MEMORY AID IN CIVIL LAW
Sales & Lease

December 18, 1987; Vda. De Macoy v. CA, GR PRE-EMPTION AND REDEMPTION DISTINGUISHED
No. 95753, February 12, 1992).
PRE-EMPTION REDEMPTION
• Example: Where a buyer a retro
honestly believed that he entered 1. arises before sale 1. arises after sale
merely into an Equitable Mortgage, 2. no rescission 2. there can be
not a pacto de retro transaction, and because no sale as rescission of the
because of such belief he had not yet exists original sale
redeemed within the proper period.
3. the action is 3. action is directed
NOTE: Tender of payment is sufficient to directed against the against the buyer
compel redemption, but is not in itself a prospective seller
payment that relieves the vendor from his
liability to pay the redemption price (Paez v. Requirements for the exercise of the right of
Magno, GR No. L-793, April 27, 1949 ). pre-emption or redemption
a. The one exercising the right must be
adjacent owner
B. b. The piece of land sold must be so small
LEGAL REDEMPTION
and so situated that major portion thereof
The right to be subrogated, upon the same terms cannot be used for any practical purpose
and conditions stipulated in the contract, in the within reasonable time
place of one who acquires a thing by (1) purchase
c. Such urban land was bought by its owner
or (2) dation in payment, or (3) by any other
merely for speculation
transaction whereby ownership is transferred by
onerous title.
• It must be exercised within thirty (30) days INSTANCES OF LEGAL REDEMPTION
from the notice in writing by the vendor Under the Civil Code (legal redemption):
• May be effected against movables and 1. Sale of a co-owner of his share to a
immovables. stranger (Art. 1620)
NOTE: Written notice under Article 1623 is
2. When a credit or other incorporeal right in
mandatory for the right of redemption to
litigation is sold (Art. 1634)
commence (PSC v. Sps. Valencia, GR No. 150060, August
19, 2003) 3. Sale of an heir of his hereditary rights to a
stranger (Art. 1088)
Art. 1623 does not prescribe any distinctive
method for notifying the redemptioner (Etcuban v. 4. Sale of adjacent rural lands not exceeding
CA, G.R. No. L-45164, March 16, 1987). one hectare (Art. 1621)
Tender of payment is not necessary; offer to 5. Sale of adjacent small urban lands bought
redeem is enough. merely for speculation (Art. 1622)
There is no prescribed form for an offer to redeem Under special laws:
to be properly effected. Hence, it can either be
1. An equity of redemption in cases of judicial
through a formal tender with consignation of
foreclosures
the redemption price within the prescribed
period. What is paramount is the availment of 2. A right of redemption in cases of extra-
the fixed and definite period within which to judicial foreclosures
exercise the right of legal redemption. 3. Redemption of homesteads
4. Redemption in tax sales
5. Redemption by an agricultural tenant of
land sold by the landowner

the owner of a credit transfers to another his rights
and actions against a third person in consideration
of a price certain in money or its equivalent
• may be onerous or gratuitous
• One can sell an inheritance without
enumerating the things of which it is
composed shall only be answerable for
his character as an heir
Assignment of Credit
NOTE: Transfer of rights takes place by the
perfection of the contract of assignment
without the necessity of delivering the
document evidencing the credit.
This rule does not apply to negotiable
documents and documents of title which are
governed by special laws.
San Beda College of Law 157
2008 CENTRALIZED BAR OPERATIONS

Effects of Assignment: 3. The debtor must pay the assignee:

1. transfers the right to collect the full value a. price paid by him
of the credit, even if he paid a price less
b. judicial cost incurred by him; AND
than such value
c. interest on the price from the date of
2. transfers all the accessory rights (e.g.
payment; and
guaranty, mortgage, pledge, preference)
4. The right must be exercised by the debtor
3. debtor can set up against the assignee all
within 30 days from the date the assignee
the defenses he could have set up against
demands (judicially or extra-judicially)
the assignor
payment from him.
Effectivity Against Third Persons
Sale of Credit or Other Incorporeal Rights in
1. if personal property is involved, a public Litigation
instrument is needed to make the
GENERAL RULE: Debtor has the right of legal
assignment effective against third persons;
redemption in sale of credit or incorporeal
2. if real property is involved, registration in rights in litigation
the Registry of Property would be needed
EXCEPTIONS:
(Paras, Civil Code, Book V, 2000)
a. Sale to a co-heir or co-owner
Effect of payment by the debtor after
assignment of credit Reason: the law does not favor co-
ownership
1. Before Notice of the assignment
b. Sale to a creditor in payment of his
Payment to the original creditor is valid
credit
and debtor shall be released from his
obligation Presumption: the assignment is
above suspicion; assignment is in the
2. After Notice
form of “dacio en pago”, thus perfectly
Payment to the original creditor is not valid legal
as against the assignee
c. Sale to the possessor of property in
He can be made to pay again by the question
assignee
Purpose: to presumably preserve the
Warranties of the assignor of credit: tenement
a. He warrants the existence of the credit
b. He warrants the legality of the credit at the
perfection of the contract
NOTE: There is no warranty as to the solvency
of the debtor unless it is expressly stipulated
OR unless the insolvency was already existing
and of public knowledge at the time of the
assignment
Liabilities of the assignor of credit for violation
of his warranties
1. Assignor in good faith
Liability is limited only to the price received
and to the expenses of the contract, and
any other legitimate payments by reason
of the assignment
2. Assignor in bad faith
Liable not only for the payment of the price
and all the expenses but also for damages
Legal Redemption in Sale or Credit or other
incorporeal right in litigation
Requisites:
1. There must be a sale or assignment of
credit;
2. There must be a pending litigation at the
time of the assignment;
158
Sales & Lease
Barter
Barter
Contract whereby one of the parties binds himself
to give one thing in consideration of the other’s
promise to give another thing (Art. 1638).
NOTE: Barter is similar to a sale with the only
difference that instead of paying a price in money,
another thing is given in lieu of the purchase price
PERFECTION AND CONSUMMATION
Perfected from the moment there is meeting of
minds upon the things promised by each party
in consideration of the other.
Consummated from the time of mutual delivery
by the contracting parties of the things
promised.
Purpose of the Law
The Bulk Sales Law is designed to prevent the
defrauding of creditors by the secret sale or
disposal or mortgage in bulk of all or
substantially all of a merchant’s stock of goods.
When Sale or Transfer in Bulk:
Any sale, transfer, mortgage, or assignment:
1. Of a stock of goods, wares, merchandise,
provisions, or materials otherwise than in
the ordinary course of trade and the
regular prosecution of business; or
2. Of all or substantially all, of the business
or trade; or
3. Of all or substantially all, of the fixtures
and equipment used in the business of the
vendor, mortgagor, transferor or assignor
(Sec. 2)
When sale or transfer in bulk not covered by
Bulk Sales Law:
1. If the sale or transfer is in the ordinary
course of trade and the regular
prosecution of business of the vendor;
2. If it is made by one who produces and
delivers a written waiver of the provisions
of the Bulk Sales Act from his creditors
3. If it is made by an executor, administrator,
receiver, assignee in insolvency, or public
officer, acting under judicial process (Sec. 8);
and
MEMORY AID IN CIVIL LAW
NOTES: Barter is a mutual sale. Each party really
is both a vendor and a vendee.
Where the giver of the thing bartered is not the
lawful owner thereof, the aggrieved party
cannot be compelled to deliver the thing which
he has promised and is also entitled to
damages (Art. 1639).
Where a party is evicted of the thing exchanged,
the injured party is given the option, either to
recover the property he has given in exchange
with damages or only claim an indemnity for
damages (Art. 1640).
As to matters not provided for by the provisions on
barter, the provisions on sales will apply
suppletorily (Art. 1641).
Bulk Sales Law (Act No. 3952)
4. If it refers to properties exempt from
attachment or execution (Rules of Court, Rule
39, Sec. 12)
Protection Accorded to Creditors by Bulk
Sales Law:
1. It requires the vendor, mortgagor,
transferor or assignor to deliver to the
vendee, mortgagee, or to his or its agent
or representative a sworn written
statement of names and addresses of all
creditors to whom said vendor, etc. may
have been indebted together with the
amount due or to be due (Sec. 3).
2. It requires the vendor, mortgagor,
transferor or assignor, at least 10 days
before the sale, transfer, mortgage,
assignment to make a full detailed
inventory showing the quantity and the
cost of price of goods, and to notify every
creditor of the price terms and conditions
of the sale, etc. (Sec. 5)
Effects of False Statements in the Schedule of
Creditors:
1. Without knowledge of buyer
If the statement is fair upon its face and
the buyer has no knowledge of its
incorrectness and nothing to put him
on inquiry about it, he will be protected
in its purchase
San Beda College of Law
The remedy of the creditor is not against
the goods but to prosecute the seller
criminally
2. With knowledge or imputed knowledge
of buyer
The vendee accepts it at his peril
The sale is valid only as between the
vendor and the vendee but void
against the creditors
3. With names of certain creditors without
notice are omitted from the list
The sale is void as to such creditors,
whether the omission was fraudulent or
not.
4. With respect to an innocent purchaser
for a value from the original purchaser
An innocent purchaser for value from the
original purchaser is protected
However if the circumstances are such as
to bind the subsequent purchaser with
constructive notice that the sale to the
vendor (original purchaser) was
fraudulent, the property will be liable in
his hands to creditors of the original
vendor
Effect of violation of law on Transfer:
1. As between the parties
The Bulk Sales Law does not in any way
affect the validity of the transfer as
between the intermediate parties
thereto
Retail Trade Liberalization Act (RA 8762)
RETAIL TRADE
Any act, occupation or calling of habitually selling
direct to the general public merchandise,
commodities or goods for consumption, but the
restrictions of this law shall not apply to the
following:
1. Sales by manufacturer, processor,
laborer, or worker, to the general public
the products manufactured, processed
produced by him if his capital does not
exceed P100,000;
2. Sales by a farmer or agriculturalist selling
the products of his farm
3. Sales in restaurant operations by a hotel
owner or inn-keeper irrespective of the
amount of capital; provided that the
restaurant is incidental to the hotel
business; and
159
2008 CENTRALIZED BAR OPERATIONS
A sale not in compliance with the Bulk
Sales Law is valid against all persons
other than the creditors.
2. As against creditors
A purchaser in violation of the law acquires
no right in the property purchased as
against the creditors of the seller.
His status is that of a trustee or receiver
for the benefit of the creditors of the
seller; as such, he is responsible for
the disposition of the property.
Remedies Available to creditors:
1. The proper remedy is one against the
goods to subject them to the payment of
the debt, such as execution, attachment,
garnishment, or by a proceeding in equity
2. An ordinary action against the purchaser
to obtain money judgement will not lie,
unless the purchaser has sold or
otherwise disposed of, or dealt with the
property, so as to become personally liable
to creditors for value of it.
Acts Punished by Bulk Sales Law:
1. Knowingly or willfully making or delivering
a statement required by the Act which
does not include the names of all the
creditors of the vendor, etc. with the
correct amount due or to become due or
which contains any false or untrue
statement; and
2. Transferring title to any stock of goods,
wares, merchandise, provisions or
materials sold in bulk without
consideration or for nominal consideration
(Sec. 7)
4. Sales which are limited only to products
manufactured, processed or assembled
by a manufacturer through a single outlet,
irrespective of capitalization.
Elements of Retail Trade
1. The seller habitually engaged in selling;
2. The sale is direct to the general public;
3. The object of the sale is limited to
merchandise, commodities or goods for
consumption.
High-End or Luxury Goods
Goods which are not necessary for life
maintenance and whose demand is generated
in large part by the higher income groups
• Shall include but not limited to: jewelry,
branded or designer clothing and footwear,
wearing apparel, leisure and sporting
160 MEMORY AID IN CIVIL LAW
Sales & Lease

goods, electronics and other personal
effects
NOTE: A natural-born citizen of the Philippines
who has lost his citizenship but who resides in
the Philippines shall be granted the same
rights as Filipino citizens
Foreign Equity Participation:
Foreign-owned partnerships, associations and
corporations formed and organized under the
laws of the Philippines may, upon registration
with Securities and Exchange Commission
(SEC) and Department of Trade and Industry
(DTI), or in case of Foreign-owned single
proprietorship with the DTI, engage or invest in
retail trade business, subject to the following
categories:
1. Category A:
Paid-up capital of the equivalent in
Philippine Peso of: less than
$2,500,00
Reserved exclusively for Filipino citizens
and corporations wholly owned by
citizens
2. Category B:
Minimum paid-up capital of the equivalent
in Philippine Peso of $2,500,000, but
less than $7,500,000
subject the foreign investors to penalties or
restrictions on any future trading activities/
business in the Philippines
Foreign Investors Acquiring Shares of Stock of
existing retail stores whether or not publicly
listed whose net worth is in excess of the
Peso equivalent of $2,500,000 may
purchase only up to the maximum of 60%
of the equity thereof within the first 2 years,
and thereafter, they may acquire the
remaining percentage consistent with the
allowable foreign participation as herein
provided
All retail Trade enterprises under categories B
and C in which foreign ownership exceeds
80% of equity shall offer a minimum of 30%
of their equity to the public through any
stock exchange in the Philippines within 8
years from the start of the operations
Qualification of Foreign Retailers
1. Minimum of $200,000,000 net worth in its
parent corporation for Categories B and C
and $50,000,000 net worth in its parent
corporation for Categories D
2. 5 retailing branches or franchises in
operation anywhere around the world
unless such retailer has at least 1 store
capitalized at a minimum of $25,000,000

May be wholly owned by foreigners except 3. 5-year track record in retailing; and
for the first two years after the effectivity 4. Only nationals from, or juridical entities
of this Act wherein foreign participation formed or incorporated in Countries which
shall be limited to not more than 60% allow to engage in retail trade in the
of total equity. Philippines
3. Category C:
Paid-up capital of the equivalent in
Philippine Peso of: $7,500,000 or
more
May be wholly owned by foreigners
NOTE: In no case shall the investments for
establishing a store in Categories B and C
be less than the equivalent in Philippine
Peso of: US $830,000
4. Category D:
Enterprises specializing in high-end or
luxury products with paid-up capital of
the equivalent in Philippine Peso of:
$250,000 per store
May be wholly owned by foreigners
NOTES: Foreign investor shall be required to
maintain in the Philippines the FULL amount of
the prescribed minimum capital, UNLESS the
foreign investor has notified the SEC and the
DTI of its intention to repatriate its capital and
cease operations in the Philippines
Failure to maintain the full amount of the
prescribed minimum capital prior to
notification of the SEC and the DTI shall
San Beda College of Law 161
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Lease
Lease
consensual, bilateral, onerous, and commutative RENT
contract by virtue of which one person binds
The compensation either in money, provisions,
himself to grant temporarily the use of the thing or
chattels, or labor, received by the lessor from the
to render some service to another who undertakes
lessee.
to pay some rent.
NOTES: When a student boards and lodges in a
dormitory, there is no contract of lease. The
Kinds of Leases (From the view point of the contract is not designated specifically in the Civil
subject matter) Code. It is an innominate contract. It is, however,
believed that the contract can be denominated as
1. Lease of things
the contract of board and lodging.
2. Lease of service
There is a contract of lease when the use and
3. Lease of work enjoyment of a safety deposit box in a bank is
NOTE: Since lease is consensual and is not given for a price certain. This is certainly not a
imposed by law, only the lessor has the right to contract of deposit.
fix the rents. However, the increasing of the A lease of personal property with option to buy (at
rent is not an absolute right on the part of the a nominal amount) at the end of the lease can
lessor. be considered a sale.
Characteristics or Requisites for Lease of
Things
LEASE AND SALES DISTINGUISHED
1. Consensual
LEASE SALES
2. Principal
1. only use or 1. ownership is
3. Nominate enjoyment is transferred transferred
4. Purpose is to allow enjoyment or use of a 2. transfer is temporary 2. transfer is permanent
thing (the person to enjoy is the lessee;
the person allowing the enjoyment by 3. lessor need not be 3. seller must be the
another is the lessor) the owner owner at the time the
property is delivered
5. Subject matter must be within the
4. the price of the 4. usually, the selling
commerce of man
object, distinguished price is mentioned
6. Purpose to which the thing will be devoted from the rent, is usually
should not be immoral not mentioned
7. Onerous (there must be rent or price LEASE OF THINGS AND LEASE OF SERVICES
certain) DISTINGUISHED
8. Period is Temporary (not perpetual, hence,
the longest period is 99 years) Lease of Things Lease of Services
9. Period is either definite or indefinite 1. object of contract is a 1. object is some work
thing or service
If no term is fixed, we should apply Art.
1682 (for rural leases) and Art. 1687 2. lessor has to deliver 2. lessor has to perform
(for urban leases) the thing leased some work or service

If the term is fixed but indefinite, the court 3. in case of breach, 3. in case of breach, no
will fix the term under the law on there can be an action action for specific
obligations and contracts for specific performance performance

10. Lessor need not be the owner

NOTE: A usufructuary may thus lease the
premises in favor of a stranger, such lease to
end at the time that the usufruct itself ends
162 MEMORY AID IN CIVIL LAW
Sales & Lease

LEASE OF SERVICES AND CONTRACT FOR PIECE OF Purpose in Recording a Lease

WORK DISTINGUISHED
useful only for the purpose of notifying
Lease of Services Contract for a Piece of strangers to the transaction
(locatio operatum) Work (locatio operas) Proper Authority Required:
1. the important object 1. the important object is If a lease is to be recorded, the following
is the labor performed the work done persons must have proper authority (power of
by the lessor attorney to constitute the lease):
2. the result is 2. the result is generally 1. the husband (with respect to the
generally not important; generally, the paraphernal real estate of the wife)
important, hence the price is not payable until
laborer is entitled to the work is completed, 2. the father or guardian (with respect to the
be paid even if there and said price cannot be property of the minor or the ward)
is destruction of the lawfully demanded if the 3. the manager (administrator) (with respect
work through work is destroyed before to the property under his administration).
fortuitous event it is finished and accepted
NOTE: “manager” may be:
LEASE OF SERVICES AND AGENCY DISTINGUISHED a. the administrator of conjugal property
(Rodriguez v. Borromeo, 43 Phil. 479);
Lease of Services Agency
b. administrator of co-ownership (Melencio v. Dy
It is based on employment It is based on
Tiao Lay, G.R. No. L-32047, November 1, 1930);
– the lessor of services representation –
and
does not represent his agent represents his
employer nor does he principal and enters c. administrator of state patrimonial property
execute juridical acts. into juridical acts. (Tipton v. Andueza, G. R. No. 2070, January 2,
1906).
Principal contract Preparatory contract
Persons Disqualified to be Lessees Because
Disqualified to Buy
Rule for Lease of Consumable Goods 1. A husband and a wife cannot lease to
GENERAL RULE: Consumable goods cannot each other their separate properties
be the subject matter of a contract of lease except:
of things. a. if separation of property was
Reason: To use or enjoy them, they will agreed upon
have to be consumed. This cannot be done b. if there has been judicial
by a lease since ownership over them is separation of property.
not transferred to him by the contract of
lease. Reasons:

EXCEPTIONS: 1. to prevent prejudice to creditors

a. If they are merely exhibited 2. to prevent the stronger spouse

b. If they are accessory to an industrial
establishment
Recording of Lease of Personal Property
GENERAL RULE: Lease of real property is
personal right
EXCEPTIONS: Lease partakes of the nature of
real right if:
a. Lease of real property is more than 1
year
b. Lease of real property is registered
regardless of duration
NOTE: Lease of personal property cannot be
registered. To be binding against third
persons, the parties must execute a public
instrument.
Lease may be made orally, but if the lease
of real property is for more than 1 year, it must
be in writing under the Statue of Frauds.
from influencing unduly the weaker
spouse
2. Persons referred to in Art. 1491 are
disqualified because of fiduciary
relationships
Assignment of Lease
lessee cannot assign the lease without
consent of lessor (Art. 1649, Civil Code)
EXCEPTION: if there is stipulation to the
contrary
Reason: assignment of this nature
constitutes a novation (by substituting the
person of the debtor) so the creditor-lessor
must consent (Vda. De Hijos de Barretto v. Sevilla,
Inc., G.R. No. L-41768, December 17, 1935)
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Sublease
A separate and distinct contract of lease wherein b. The sublessee is subsidiarily liable to the
the original lessee becomes a sublessor to a lessor for any rent due from the lessee.
sublessee.
NOTE: The sublessee shall not be responsible
• Allowed unless expressly prohibited. beyond the amount of rent due from him.
• The sublessee is subsidiarily liable for any
rent due. The lessor has an accion directa
ACCION DIRECTA:
against the sublessee for unpaid rentals and
improper use of the object. direct action which the lessor may bring
against a sublessee who misuses the
subleased property.
SUBLEASE AND ASSIGNMENT OF LEASE
Obligations of the Lessor (DNMC)
DISTINGUISHED
a. Delivery of the object (cannot be waived)
ASSIGNMENT OF
SUBLEASE b. Making of necessary repairs
LEASE
1. there are two leases and 1. there is only one c. Maintenance in peaceful and adequate
two distinct juridical juridical relationship, possession (Art. 1654)
relationships although that of the lessor d. Cannot alter the form of the thing leased
immediately connected and and the assignee, (Art 1661)
related to each other who is converted
Obligations of the Lessee (R2EN2U)
into a lessee
a. to pay rent
2. the personality of the 2. the personality of
lessee does not disappear the lessee b. to use thing leased as a diligent father of a
disappears family, devoting it to the use stipulated
3. the lessee does not 3. the lessee c. to pay expenses for the deed of lease
transmit absolutely his transmits absolutely
d. to notify the lessor of usurpation or
rights and obligations to the his rights to the
untoward acts
sublessee assignee
4. the sublessee, generally, 4. the assignee has e. to notify the lessor of need for repairs
does not have any direct a direct action f. to return the property leased upon
action against the lessor against the lessor termination of the lease
Effect of Destruction of the Thing Leased:
Rights of Lessee to Sublease 1. Total destruction by a fortuitous event
unlike in assignment, a lessee may generally • Lease is extinguished
sublease the property in the absence of 2. Partial destruction
express prohibition
a. Proportional reduction of the rent, or
Reason: Lessee remains a party to the lease
even if he has already created a sublease b. Rescission of the lease
thereon When lessee may suspend payment of rent:
Rights of Lessor if Sublease Prohibited but 1. lessor fails to undertake necessary
Entered Into by Lessee: repairs
a. Rescission and damages, or 2. lessor fails to maintain the lessee in
b. Damages only (Contract will be allowed to peaceful and adequate enjoyment of
remain in force) the property leased

c. Ejectment NOTE: “Suspend” - for the intervening

period, the lessee does not have to pay the
Instances when sublessee is liable to the rent.
lessor:
Effectivity of the Suspension:
a. All acts which refer to the use and
preservation of the thing leased in the The right begins:
manner stipulated between the lessor and a. In the case of repairs, from the time he
the lessee made the demand for said repairs, and
the demand went unheeded.
164
Sales & Lease
b. In the case of eviction, from the time
the final judgment for eviction becomes
effective.
Alternative remedies of Aggrieved party
(Lessor/Lessee) in case of Non-fulfillment of
duties:
1. Rescission and damages
2. Damages only, allowing the contract to
remain in force – Specific Performance
NOTE: Damages Recoverable in ejectment
cases are the rents or the fair rental value of
the premises. The following cannot be
successfully claimed:
1. Profits plaintiff could have earned were it
not for the possible entry or unlawful
detainer
2. Material injury to the premises
3. Actual, moral, or exemplary damages
(Baens v. CA, GR No. L-57091, November 23,
1983)
Immediate termination of lease under Art. 1660
applies:
1. only to dwelling place or any other building
intended for human habitation
2. even if at the time the contract was
perfected, the lessee knew of the
dangerous condition or waived the right to
rescind on account of this condition
RULES ON ALTERATION OF THE FORM OF THE LEASE
The Lessor can alter provided there is no
impairment of the use to which the thing is
devoted under the terms of the lease
Alteration can also be made by the Lessee so
long as the value of the property is not
substantially impaired
RULES IN CASE OF URGENT REPAIRS
The lessee is obliged to tolerate the work although
it may be very annoying to him and although
during the same time he may be deprived of a part
of the premises, if repairs last for not more than 40
days. If 40 days or more, lessee can ask for
reduction of the rent in proportion to the time –
including the 1st 40 days – and the part of the
property of which he is deprived.
NOTE: In either case, rescission may be
availed of if the main purpose of the lease is to
provide a dwelling place and the property
becomes uninhabitable.
Effects if Lessor fails to make Urgent Repairs
The lessee may:
1. order repairs at the lessor’s cost
2. sue for damages
MEMORY AID IN CIVIL LAW
3. suspend the payment of the rent
4. ask for rescission, in case of substantial
damage to him
Trespass in Lease:
1. Trespass in fact (perturbacion de mere
hecho):
• physical enjoyment is reduced
• Lessor will not be held liable.
2. Trespass in law (perturbacion de
derecho):
• A third person claims legal right to
enjoy the premises
• Lessor will be held liable
NOTE: In the Goldstein case, trespass in fact
is distinguished from legal transfer, in that, if
the act of the trespass is not accompanied or
preceded by anything which reveals a juridical
intention on the part of the trespasser, in such
wise that the lessee can only distinguish the
material fact, stripped of all legal forms or
reasons, is only trespass in fact (de mero
hecho) (Goldstein v. Roces, G.R. No. L-869, March 30,
1916).
While the Japanese Occupation was a
fortuitous event, the lessor is still not excused
from his obligation to warrant peaceful legal
possession. Lease is a contract that calls for
prestations both reciprocal and repetitive; and
the obligations of either party are not
discharged at any given moment, but must be
fulfilled all throughout the term of the contract
(Villaruel v. Manila Motor Co., GR No. 10394, December
13, 1958).
DURATION OF LEASE
1. Lease made for a determinate time or fixed
Period
Lease will be for the said period and it ends
on the day fixed without need of a demand
2. If there is no fixed period
A. For Rural Lands (Art. 1680)
it shall be for all time necessary for the
gathering of fruits which the whole estate
may yield in 1 year, or which it may yield
once
B. For Urban Lands (Art. 1687)
a. If rent is paid daily: lease is from day
to day
b. If rent is paid weekly: lease is from
week to week
c. If rent is paid monthly: lease is from
month to month
San Beda College of Law
d. If rent is paid yearly: lease is from
year to year
Rules on Extension of the Lease Period:
1. If a lease contract for a definite term
allows lessee to extend the term, there is
no necessity for lessee to notify lessor of
his desire to so extend the term, unless
the contrary is stipulated.
2. “May be extended” as stipulation: lessee
can extend without lessor’s consent but
lessee must notify lessor.
3. “May be extended for 6 years agreed upon
by both parties” as stipulation: This must
be interpreted in favor of the lessee.
Hence, ordinarily the lessee at the end of
the original period may either:
a. leave the premises; or
b. remain in possession
4. In co-ownership, assent of all is needed;
otherwise, it is void or ineffective as
against non-consenting co-owners.
5. Where according to the terms of the
contract, the lease can be extended only
by the written consent of the parties
thereto, no right of extension can rise
without such written consent.
Rule if Lessor Objects to the Lessee’s
continued Possession:
Requisites:
1. Contract has expired
2. Lessee continued enjoying the thing
3. Lessor Objected to this enjoyment
• If the three requisites are present, the
lessee shall be considered a possessor
in bad faith
IMPLIED NEW LEASE (Tacita Reconducion)
lease which arises if at the end of the contract
the lessee should continue enjoying the thing
leased for 15 days with the acquiescence of
the lessor, unless a notice to the contrary had
previously been given by either party.
Requisites:
a. The term of the original contract has
expired;
b. The lessor has not given the lessee a
notice to vacate; and
c. The lessee continued enjoying the thing
leased for at least 15 days with the
acquiescence of the lessor.
When there is no implied new lease:
1. When before or after the expiration of the
term, there is a notice to vacate given by
either party.
165
2008 CENTRALIZED BAR OPERATIONS
2. When there is no definite fixed period in
the original lease contract as in the case of
successive renewals.
Effects:
a. The period of the new lease is not that
stated in the original contract but the time
in Articles 1682 and 1687.
b. Other terms of the original contract are
revived.
NOTE: Terms that are revived are only those
which are germane to the enjoyment of
possession, but not those with respect to special
agreements which are by nature foreign to the
right of occupancy or enjoyment inherent in a
contract of lease – such as an option to purchase
the leased premises (Dizon v. Magsaysay. GR No.
23399, May 31,1974)
PERPETUAL LEASE
A lease contract providing that the lessee can stay
in the premises for as long as he wants and for as
long as he can pay the rentals and its increases.
• This is not permissible; it is a purely
potestative condition because it leaves the
effectivity and enjoyment of leasehold rights
to the sole and exclusive will of the lessee
NOTE: The SC upheld a lease contract, which
provides that “the lease contract shall continue for
an indefinite period provided that the lessee is up-
to-date in the payment of his monthly rentals” for
the contract is one with a period subject to a
resolutory condition (Jespajo Realty v. CA, G.R. No.
113626, September 27, 2002).
Purchase of the Leased Property
GENERAL RULE: Purchaser of thing leased
can terminate lease.
EXCEPTIONS:
a. lease is recorded in Registry of Property
b. there is stipulation in the contract of sale
that purchaser shall respect the lease
c. purchaser knows the existence of the
lease
d. sale is fictitious
e. sale is made with right of repurchase
Grounds for Judicial Ejectment under Art.
1673: (ELVU)
1. Expiration of the period agreed upon or
the period under Arts. 1682 and 1687;
2. Lack of payment of the price stipulated;
3. Violation of any of the conditions agreed
upon in the contract; and
4. Unauthorized use or service by the lessee
of the thing leased.
166
Sales & Lease
Subdivision and Condominium Buyers’ Protective
Decree (PD 957)
REGISTRATION OF PROJECTS
The registered owner of a parcel of land who
wishes to convert the same into a subdivision
project shall submit his subdivision plan to the
HOUSING AND LAND USE REGULATORY
BOARD, which shall act upon and approve the
same, upon a finding that the plan complies
with the Subdivision Standards and
Regulations enforceable at the time the plan is
submitted. The same procedure shall be
followed in the case of a plan for a
condominium project except that, in addition,
said Authority shall act upon and approve the
plan with respect to the building or buildings
included in the condominium project in
accordance with the National Building Code
(R.A. No. 6541).
The subdivision plan, as so approved, shall then
be submitted to the Director of Lands for
approval in accordance with the procedure
prescribed in Section 44 of the Land
Registration Act (Act No. 496, as amended by
R.A. No. 440): Provided, that in case of
complex subdivision plans, court approval shall
no longer be required. The condominium plan
as likewise so approved, shall be submitted to
the Register of Deeds of the province or city in
which the property lies and the same shall be
acted upon subject to the conditions and in
accordance with the procedure prescribed in
Section 4 of the Condominium Act (R.A. No.
4726).
National Housing authority (now Housing and
Land Use Regulatory Board) has the exclusive
jurisdiction to regulate the real estate trade and
business.
LICENSE TO SELL
Such owner or dealer to whom has been issued a
registration certificate shall not, however, be
authorized to sell any subdivision lot or
condominium unit in the registered project unless
Rent Control Act of 2005 (RA No. 9341)
Approved: December 21, 2005
Coverage:
• all residential units in the National Capital
Region and other highly urbanized cities
the total monthly rent for each of which
does not exceed ten thousand pesos
(P10,000.00)
• all residential units in all other areas the
total monthly rent for each of which does
MEMORY AID IN CIVIL LAW
he shall have first obtained a license to sell the
project within two weeks from the registration of
such project.
Exempt transactions
A license to sell and performance bond shall
not be required in any of the following
transactions:
1. Sale of a subdivision lot resulting from the
partition of land among co-owners and co-
heirs.
2. Sale or transfer of a subdivision lot by the
original purchaser thereof and any
subsequent sale of the same lot.
3. Sale of a subdivision lot or a condominium
unit by or for the account of a mortgagee
in the ordinary course of business when
necessary to liquidate a bona fide debt.
Grounds for Revocation of registration
certificate and license to sell of owners or
dealers
1. Is insolvent; or
2. Has violated any of the provisions of this
Decree or any applicable rule or regulation
of the Authority, or any undertaking of his/
its performance bond; or
3. Has been or is engaged or is about to
engage in fraudulent transactions; or
4. Has made any misrepresentation in any
prospectus, brochure, circular or other
literature about the subdivision project or
condominium project that has been
distributed to prospective buyers; or
5. Is of bad business repute; or
6. Does not conduct his business in
accordance with law or sound business
principles.
not exceed five thousand pesos
(P5,000.00) as of the effectivity date of this
act, without prejudice to existing contracts
(Sec. 11)
Effectivity: until December 31, 2008
LIMIT ON INCREASE IN RENT
• the rent of any residential unit covered by
this Act shall not be increased by more
than ten percent (10%) annually as long
San Beda College of Law
as the unit is occupied by the same
lessee.
• When the residential unit becomes vacant,
the lessor may set the initial rent for the
next lessee (Sec. 3).
Exception:
• rent to own scheme (Sec. 9)
• at the option of the lessor, he or she may
engage the lessee in a written rent-to-own
agreement that will result in the transfer of
ownership of the particular dwelling in
favor of the latter. Such an agreement
shall be exempt from the coverage of
Section 3 of this Act.
Rent - the amount paid for the use or occupancy
of a residential unit whether payment is made
on a monthly or other basis
Residential unit - shall refer to an apartment,
house and/or land on which another’s dwelling
is located and used for residential purposes
and shall include not only buildings, part or
units thereof used solely as dwelling places,
boarding houses, dormitories, rooms and bed
spaces offered for rent by their owners, except
motels, motel rooms, hotels, hotel rooms but
also those used for home industries, retail
stores or other business purposes if the owner
thereof and his or her family actually live
therein and use it principally for dwelling
purposes.
Immediate members of family of the lessee or
lessor (for purposes of repossessing the
leased premises) - limited to his or her
spouse, direct descendants or ascendants, by
consanguinity or affinity.
Lessee - the person renting a residential unit
Owner/Lessor - includes the owner or
administrator or agent of the owner of the
residential unit
Sublessor - the person who leases or rents out a
residential unit leased to him by an owner.
Sublessee - the person who leases or rents out a
residential unit from a sublessor
NOTES: Rent shall be paid in advance within the
first five (5) days of every current month or the
beginning of the lease agreement unless the
contract provides for a later date of payment.
Lessor cannot demand more than one (1) month
advance rent. Neither can he demand more
than two (2) months deposit which shall be
kept in a bank under the lessor’s account
name during the entire duration of the lease
agreement
Any and all interest that shall accrue shall be
returned to the lessee at the expiration of the
lease contract.
167
2008 CENTRALIZED BAR OPERATIONS
In the event, however, that the lessee fails to
settle rent, electric, telephone, water or such
other utility bills or destroys any house
components or accessories, the deposits and
interests therein shall be forfeited in favor of
the latter in the amount commensurate to the
pecuniary damage done by the former (Sec. 5).
Assignment of Lease or Subleasing (Sec. 6)
PROHIBITED, if without the written consent of
the owner/lessor - includes the acceptance of
boarders or bed-spacers.
Grounds for Judicial Ejectment (Sec. 7):
a. Assignment of lease or subleasing of
residential units in whole or in part without
the written consent of the owner/lessor;
b. Arrears in payment of rent for a total of
three (3) months
in case of refusal by the lessor to accept
payment of the rent agreed upon, the
lessee may either deposit, by way of
consignation, the amount in court or
with the city or municipal treasurer, as
the case may be or in a bank in the
name of and with notice to the lessor,
within one month after the refusal of
the lessor to accept payment
lessee shall thereafter deposit the rent
within ten (10) days of every current
month. Failure to deposit the rent for
three months shall constitute a ground
for ejectment.
the lessor, upon authority of the court in
case of consignation or upon joint
affidavit by him and the lessee to be
submitted to the city or municipal
treasurer and to the bank where
deposit was made, shall be allowed to
withdraw the deposits;
c. Legitimate need of the owner/lessor to
repossess his share or her property for
his or her own use or for the use of any
immediate member of his family as a
residential unit
Conditions:
• the lease for a definite period has
expired
• the lessor has given the lessee formal
notice three (3) months in advance of
the lessor’s intention to repossess the
property
• the owner/lessor is prohibited from
leasing the residential unit or allowing
its use by a third party for a period of
at least one (1) year from the time of
repossession
168
Sales & Lease
d. Need of the lessor to make necessary
repairs of the leased premises which is
the subject of an existing order of
condemnation by appropriate authorities
concerned in order to make the said
premises safe and habitable
Conditions:
• after said repair, the lessee ejected
shall have the first preference to lease
the same premises;
• the new rent shall be reasonably
commensurate with the expenses
incurred for the repair of the said
residential unit
• that if the residential unit is
condemned or completely
demolished, the lease of the new
building will no longer be subject to
! END OF SALES AND LEASE
MEMORY AID IN CIVIL LAW
the aforementioned first preference
rule
e. Expiration of the period of the lease
contract
NOTES: No lessor or his successor in interest
shall be entitled to eject the lessee upon the
ground that the leased premises have been
sold or mortgaged to a third person regardless
of whether the lease or mortgage is registered
or not (Sec. 8)
Except when the lease is for a definite period,
the provision of paragraph (1) of Article 1673 of
the Civil Code of the Philippines, insofar as
they refer to residential units covered by this
Act, shall be suspended during the effectivity of
this Act, but other provisions of the Civil Code
and the Rules of Court on lease contracts,
insofar as they are not in conflict with the
provisions of this Act shall apply (Sec. 10).
"
San Beda College of Law 169
2008 CENTRALIZED BAR OPERATIONS

CIVIL LAW
PARTNERSHIP
PARTNERSHIP

Partnership
By the contract of partnership two or more partnership contract, it may however engage in a
persons bind themselves to contribute money, joint venture.
property or industry to a common fund, with the
intention of dividing the profits among themselves.
COMMON FUND: a partnership may be deemed
• Two or more persons may also form a
to exist among parties who agree to borrow
partnership for the exercise of a profession
money to pursue a business and to divide the
(Article 1767).
profits or losses that may arise therefrom, even if
it is shown that they have not contributed any
capital of their own to a “common fund,” as their
Essential Requisites: (C3OP-G)
contribution to such fund could be an intangible
1. There must be a valid contract; like credit or industry (Lim Tong Lim v. Phil. Fishing Gear
2. The parties must have legal capacity to enter Industries. Inc. GR No. 136448. November 3, 1999).
into the contract;
3. There must be a mutual contribution of MERCANTILE VIEW OF THE NATURE OF A
money, property, or industry to a common PARTNERSHIP (Art. 1768)
fund;
A partnership has a juridical personality separate
4. The object or purpose must be lawful (Art. and distinct from that of each of the partners.
1770);
5. The primary purpose must be to obtain profits
to divide the same among the parties; and RULES TO DETERMINE EXISTENCE OF PARTNERSHIP
(Art. 1769)
6. There must be at least one general partner.
GENERAL RULE: Persons who are not
NOTE: With regard to number 2, individuals not partners as to each other are not partners
legally incapacitated to contract partnerships may as to third persons.
enter into a contract of partnership.
EXCEPTION: partnership by estoppel
With respect to corporations, the court held in
Aurbach v. Sanitary Wares Manufacturing 1. Co-ownership of a property does not itself
Corporation, GR No. 75875, December 15, 1989, establish a partnership, even though the
that although a corporation cannot enter into a co-owners share in the profits derived from
the incident of joint ownership.
EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
170 MEMORY AID IN CIVIL LAW
Partnership

2. Sharing of gross returns alone does not PARTNERSHIP AND CO-OWNERSHIP DISTINGUISHED
indicate a partnership, whether or not the (CJP3-D2AFT)
persons sharing them have a joint or
Partnership Co-ownership
common right or interest in any property
from which the returns are derived. 1. Creation
3. Receipt of share in the profits is a strong Always created by a Generally created by
presumptive evidence of partnership. contract, either express or law, but may exist
However, no such inference will be drawn implied even without a
if such profits were received in payment: contract
(DWAIC)
2. Juridical personality
a. as a debt by installments or otherwise; Has a juridical personality Has no juridical
b. as wages of an employee or rent to a separate and distinct from personality
landlord; that of each partner
c. as an annuity to a widow or 3. Purpose
representative of a deceased partner; Realization of profits Common enjoyment
d. as interest on a loan, though the of a thing or right;
amount of payment vary with the 4. Power to act with third persons
profits of the business; and
In general a partner may A co-owner cannot
e. as the consideration for the sale of a bind the partnership represent the co-
goodwill of a business or other ownership
property by installments or otherwise.
5. Profits
Test of Partnership Existence: May be stipulated upon Must always depend
1. Whether or not there is an agreement to upon proportionate
contribute money, property, or industry to a shares and any
common fund; and stipulation to the
contrary is VOID
2. Whether or not there is an intent of the
contracting parties to divide the profits among 6. Duration
themselves. No limitation upon the An agreement to
duration is set by law keep the thing
undivided for more
FORM OF CONTRACT than 10 years is not
GENERAL RULE: No special form is required for allowed
its validity or existence (Art. 1771) (Regardless 7. Dissolution
of the value of the contribution).
Death or incapacity of a Death or incapacity
EXCEPTIONS: partner dissolves the of a co-owner does
1. Where the contract of partnership has a partnership not necessarily
capital of 3,000 pesos or more, in money or dissolve the co-
property, it shall appear in a public instrument ownership
and must be recorded in the Office of the 8. Agency or representation
Securities and Exchange Commission.
As a rule, there is mutual As a rule, there is no
However, a partnership has a juridical
agency mutual
personality even in case of failure to comply
representation
with this requirement (Article 1772).
9. Form
2. Where immovable property or real rights are
contributed (regardless of the value thereof): In general there is no No public instrument
required form (See is needed even if
a. Must be in writing in a public instrument exceptions) real property is the
b. An inventory of the property contributed, object of the co-
signed by the parties is attached to the ownership
public instrument (Article 1773). 10 Transfer of interests
if there is no inventory – contract of A partner may not dispose A co-owner can
partnership is void. of his individual interest in dispose of his share
c. Must be recorded with the Register of the partnership so as to without the consent
Deeds where the immovable is located to make the assignee a of the others
bind third persons. partner without unanimous
consent
3. Where the contract falls within the statute of
frauds.
San Beda College of Law 171
2008 CENTRALIZED BAR OPERATIONS

PARTNERSHIP AND CORPORATION DISTINGUISHED 12. Dissolution

(CNJ–PMERET2–FDG)
may be dissolved at any can only be dissolved with
Partnership Corporation time by any or all of the the consent of the State
partners
1. Creation
13. Governing Law
Created by mere Created by law or by
agreement operation of law governed by the governed by the
contract and the Civil Corporation Code
2. Number of incorporators Code
at least two persons Requires at least five
incorporators (except a
corporation sole) JOINT VENTURE
3. Commencement of juridical personality
In Kilosbayan, Incorporated v. Guingona, Jr
from the moment of from the date of issuance (GR. No. 118910 November 16, 1995), the court
execution of the of the certificate of defined a joint venture as an association of
contract of partnership incorporation by the SEC persons or companies jointly undertaking
4. Powers some commercial enterprise; generally all
may exercise any power can exercise only the contribute assets and share risks.
authorized by the powers expressly granted Requisites:
partners by law or implied from
those granted or incident a. A community of interest in the
to its existence performance of the subject matter;
5. Management b. A right to direct and govern the policy in
When management is vested in the board of connection therewith;
not agreed upon, every directors or trustees c. Duty to share profits and losses.
partner is an agent of
the partnership NOTE: Under the Civil Code, a partnership
6. Effect of mismanagement may be particular or universal, and a particular
partnership may have for its object a specific
A partner as such can The suit against a member undertaking. Hence, a joint venture may be
sue a co-partner who of the board of directors or treated like any other contract, innominate in
mismanages trustees who mismanages
must be in the name of the nature to be regulated and governed primarily
corporation by the stipulations of the parties thereto and
suppletorily by the general provisions of the
Civil Code on obligations and contracts, by
7. Right of succession
rules governing the most analogous contracts
No such right Has such right and by the customs of the place.
8. Extent of liability to third persons The main distinction in common law
Partners are generally Stockholders are liable jurisdiction is that partnership contemplates a
liable for partnership only to the extent of the general business with some degree of
debts to third persons shares subscribed by continuity, while joint venture is formed for the
them execution of a single transaction and is thus of
9. Transferability of interest temporary nature
Partner cannot transfer Stockholder has generally Classification of Partnership (OLDER-P2)
his interest in the the right to transfer his
1. as to object:
partnership so as to shares without prior
make the transferee a consent of the other a. universal partnership
partner without the stockholders
unanimous consent of i. of all present property
all the existing partners ii. of profits
10. Term of existence
b. particular partnership
partnership may be corporation may not be
established for any formed for a term in 2. as to liability of partners:
period of time stipulated excess of 50 years a. general partnership
by the partners extendible to not more
than 50 years in any one b. limited partnership
instance 3. as to duration:
11. Firm name
a. partnership at will
limited partnership is corporation may adopt any
required by law to add name provided it is not the b. partnership with a fixed period
the word “Ltd.” To its same as or similar to any 4. as to legality of existence:
name registered firm name
a. de jure partnership
172
Partnership
b. de facto partnership
e. as to representation to others:
a. ordinary or real partnership
b. ostensible or partnership by estoppel
f. as to publicity:
a. secret partnership
b. notorious or open partnership
g. as to purpose:
a. commercial or trading
b. professional or non-trading
UNIVERSAL PARTNERSHIP
UNIVERSAL PARTNERSHIP OF ALL
PRESENT PROPERTY
one wherein the partners contribute all the
property which actually belong to them to a
common fund, with the intention of dividing the
same among themselves, as well as all the profits
which they may acquire therewith (Art. 1778).
• the property which belongs to each of the
partners at the time of the constitution of the
partnership, becomes the common property of
all the partners, as well as the profits which
they may acquire therewith.
• Unless otherwise stipulated in the articles of
universal partnership it will be presumed to be
a partnership of profits.
NOTE: Future properties cannot be contributed.
Thus, property subsequently acquired by (1)
inheritance, (2) legacy or (3) donation cannot be
included by stipulation except the fruits thereof.
UNIVERSAL PARTNERSHIP OF PROFITS
one which comprises all that the partners may
acquire by their industry or work during the
existence of the partnership and the usufruct of
movable or immovable property which each of the
partners may posses at the time of the celebration
of the contract (Art. 1780).
• Articles of Universal Partnership entered into
without specification of its nature, only
constitute a Universal Partnership of Profits
(Art. 1781).
Reason: A universal partnership of profits
imposes less obligations on the partners,
since they preserve the ownership of their
separate property.
NOTE: Persons who are prohibited from giving
each other any donation or advantage cannot
enter into a universal partnership (Art. 739, Art. 87,
Family Code) (Article 1782).
MEMORY AID IN CIVIL LAW
Reason: To allow persons who are prohibited
to give each other any donation or advantage
to form a universal partnership will be like
permitting them to do indirectly what the law
expressly prohibits.
Profits acquired by their partners through
chance (i.e. lottery) without employment of any
physical or intellectual efforts are not included.
PARTICULAR PARTNERSHIP
one which has for its object determinate things,
their use or fruits, or a specific undertaking, or the
exercise of a profession or vocation (Art. 1783).
CLASSIFICATION OF PARTNERS
1. as to the NATURE of contribution:
a. Capitalist partner - contributes money or
property.
b. Industrial partner - contributes only his
industry or personal service.
2. as to LIABILITY:
a. General partner - liability to third persons
extends to his separate property.
b. Limited partner - liability to third persons
is limited to his capital contribution.
3. as to MANAGEMENT:
a. Managing partner - manages the
business or affairs of the partnership;
b. Silent partner - does not take any active
part in the business although he may be
known to be a partner.
c. Liquidating partner - takes charge of the
winding up of the partnership affairs upon
dissolution.
4. as to EXPOSURE to public perception:
a. Ostensible partner - one who takes
active part and known to the public as a
partner in the business, whether or not he
has actual interest in the firm.
b. Secret partner - takes active part in the
business but is not known to be a partner
by outside parties nor held out as a
partner by the other partners.
c. Dormant partner - does not take active
part in the business and is not known or
held out as partner.
5. s to MEMBERSHIP:
a. Real partner – one who is really a
contributing member of an existing legal
partnership.
b. Partner by estoppel – or quasi-partner.
One who is not really a partner but
represents himself as one.
San Beda College of Law 173
2008 CENTRALIZED BAR OPERATIONS

6. as to CONTINUATION of the business affairs 10. as to the effect of EXPULSION:

after dissolution:
a. Expelled partner – one who is expelled
a. Continuing partner – one who continues from the partnership by the other partner/
the partnership business after the s for a valid cause.
dissolution of the partnership due to the
b. Expelling partner – partner who caused
reasons stated in Article 1840.
the expulsion of a partner for a valid
b. Discontinuing partner – one who does cause.
not participate in the partnership business
after its dissolution.
CAPITALIST AND INDUSTRIAL PARTNER
7. as to the VALUE of contribution:
DISTINGUISHED (CP2L)
a. Majority partner – one whose
contribution represents the majority or Capitalist Partner Industrial Partner
controlling interest; 1. as to contribution
b. Nominal partner – one whose contributes money or contributes his
contribution represents only a minority property industry
interest.
2. prohibition to engage in other business
8. as to the NATURE OF MEMBERSHIP: Cannot generally engage cannot engage in any
a. Original partner – one who is a member in the same or similar business for himself
of the partnership from the time of its enterprise as that of his
commencement as a juridical person. firm
b. Incoming partner – one who becomes a 3. as to profits
member subsequent to the establishment shares in the profits receives a just and
of the firm or one who is about to be according to agreement equitable share
admitted by the consent of all the thereon; if none, pro rata
members. to his contribution
9. as to the state of SURVIVORSHIP: 4. as to losses
a. Surviving partner – one who remains 1. first, the stipulation as exempted as to losses
alive while one of the partners dies or one to losses; as between partners;
who continues to be in the partnership 2. if none, the but is liable to third
after its dissolution by reason of the death agreement as to persons, without
of a partner. profits; prejudice to
b. Deceased partner – one who died while 3. if none, pro rata to reimbursement from
being a member of the partnership. contribution the capitalist partners

Obligations of Partners
OBLIGATIONS OF PARTNERS e. To preserve the property with the
diligence of a good father of a family
AMONG THEMSELVES pending delivery to the partnership
f. To indemnify for any damages caused by
1. Obligation with respect to contribution of the retention of the property or by delay in
property its contribution.
a. To contribute what had been promised 2. Obligations with respect to contribution of
(Art. 1786) money and money converted to personal
use
b. To warrant property contributed in case of
eviction (Art. 1786) a. To contribute on the date due the amount
promised to be given (Art. 1788)
c. To deliver the fruits of the property from
the time they should have been delivered, b. To reimburse any amount he may have
without the need of any demand (Art. taken from the partnership coffers and
1786) converted to his own personal use (Art.
1788)
d. When contribution is in goods, the
amount thereof must be determined by c. To pay the agreed or legal interest, if he
proper appraisal of the value thereof at fails to pay (a & b) in due time (Art. 1788)
the time of contribution (Art. 1787)
174
Partnership
d. To indemnify the partnership for the
damages caused to it by the delay in the
contribution (a, b & c)
3. Obligation Not to Engage in Other
Business for Himself
a. Industrial partner - cannot engage in
any business for himself unless the
partnership expressly permits him to do
so. The other partners have the remedy
of either excluding the erring partner from
the firm or of availing themselves of the
benefits which he may have obtained (Art.
1789).
b. Capitalist partner - The prohibition
extends only to any operation which is of
the same kind of business in which the
partnership is engaged unless there is a
stipulation to the contrary.
4. Obligation to Contribute Additional Capital
In case of an imminent loss of the business,
and there is no agreement to the contrary,
Capitalist partners are under obligation to
contribute an additional share to save the
venture. If he refuses to contribute, he shall
be obliged to sell his interest in the
partnership to other partners (Art. 1791).
3. Obligation of Managing Partner who
Collects Debt
Where a person is separately indebted to the
partnership and to the managing partner at
the same time, any sum received shall be
applied to the two credits in proportion to their
amounts, except where he received it entirely
for the account of the partnership, in which
case the whole sum shall be applied to the
partnership credit only (Art. 1792).
4. Obligation of Partner Who Receives Share
in Partnership Credit
Such partner is obliged, if the debtor should
become insolvent, to bring to the partnership
capital what he received even though he may
have given receipt for his share only (Art.
1793).
5. Obligation of Partner for Damages to
Partnership
Every partner is responsible to the partnership
for damages suffered by it through his fault.
He cannot compensate them with the profits
and benefits which he may have earned for
the partnership by his industry.
However, the courts may equitably lessen
this responsibility if through the partner’s
extraordinary efforts in other activities of the
partnership, unusual profits have been
realized (Art. 1794).
6. Duty to Render Information
Partners shall render on demand true and full
information of all things affecting the
MEMORY AID IN CIVIL LAW
partnership to any partner or the legal
representative of any deceased partner of any
partner under legal disability.
7. Obligation to account for any benefit and
hold as trustee unauthorized personal
profits
Every partner must account to the partnership
for any benefit, and hold as trustee for it any
profits derived by him without the consent of
the other partners from any transaction
connected with the formation, conduct,
liquidation of the partnership or form any use
by him of its property (Art. 1807).
RULES FOR DISTRIBUTION OF PROFITS AND
LOSSES
1. Distribution of profits
a. According to their agreement (but not
iniquitously to defeat Art. 1799)
b. If none,
1. Share of capitalist partner shall be
in proportion to his capital
contribution
2. Industrial partner shall receive
such share as may be just and
equitable
2. Distribution of losses
a. Same as 1.a
b. If none, according to their agreement
as to profits
c. No profit agreement, in proportion to
his capital contribution.
GENERAL RULE: A stipulation excluding a
partner from any share in the profits or losses
is VOID (Art. 1799)
EXCEPTIONS: Art. 1797(2) excludes an industrial
partner from losses, but he is NOT exempted
from liability insofar as third persons are
concerned.
NOTE: In general, LIABILITY refers to
responsibility towards third persons, and LOSSES
refers to responsibility as among partners
San Beda College of Law
MANAGEMENT OF PARTNERSHIP
WHEN THE MANNER OF MANAGEMENT HAS BEEN
PROVIDED FOR IN THE PARTNERSHIP AGREEMENT
A. When a managing partner has been
appointed
1. Appointment in the articles of partnership
(Art. 1800)
a. Power is irrevocable without just or
lawful cause
i. to remove him for JUST cause,
vote of partners having
controlling interest is necessary
ii. to remove him without just cause
or for UNJUST cause, there must
be unanimity including his own
vote
b. Extent of power
i. if he acts in good faith, he may
perform all acts of
ADMINISTRATION, despite
opposition of his partners
ii. if in bad faith, he cannot.
2. Appointment other than in the articles of
partnership
a. Power to act may be revoked at any
time, with or without just cause
b. Extent of power: as long as he
remains manager, he can perform all
acts of administration, but if others
oppose and he persists, he can be
removed
B. When two or more managing partners
have been entrusted with the management
(Art. 1801)
1. Without specification of their respective
duties and without stipulation requiring
unanimity of action
GENERAL RULE: Each may execute all
acts of administration
EXCEPTION: If any such partner should
oppose,
a) Decision of the majority of the
managing partners shall prevail
b) In case of a tie, decision of the
partners having the controlling
interest shall prevail
2. With stipulation requiring unanimity of
action
GENERAL RULE: Unanimous consent of
all the managing partners shall be
necessary for the validity of the acts
and absence or inability of any
managing partner cannot be alleged
175
2008 CENTRALIZED BAR OPERATIONS
EXCEPTION: When there is an imminent
danger of grave or irreparable injury
to the partnership
WHEN MANNER OF MANAGEMENT HAS NOT BEEN
AGREED UPON (Art. 1802)
a. All partners shall be considered managers
and agents
b. Unanimous consent required for alteration of
immovable property
CONTRACT OF SUB-PARTNERSHIP (Art. 1804)
One formed between a member of a partnership
and a third person for a division of profits owing to
him from the partnership enterprise.
• It is a partnership within a partnership distinct
and separate from the main or principal
partnership.
RIGHTS OF A PARTNER
1. Property rights of a partner (Art. 1810) (SIM)
a. His rights in the specific partnership
property
b. His interest in the partnership
c. His right to participate in the management
2. Right to reimbursement for amounts
advanced to the partnership and to
indemnification for risks in consequence of
management (Art. 1796)
3. Right to associate with another person in his
share (Art. 1804)
4. Right of access and inspection of partnership
books (Art. 1805)
5. Right to true and full information of all things
affecting the partnership (Art. 1806)
6. Right to a formal account of partnership
affairs under certain circumstances (Art. 1809)
(WAPO)
a. if he is wrongfully excluded from the
partnership business or possession of
its property by his co-partners;
b. if the right exists under the terms of
any agreement;
c. if a partner has derived profits from any
transaction connected with the
formation, conduct, or liquidation of
the partnership or from any use by him
of its property; or
d. whenever other circumstances render
it just and reasonable.
NOTE: As long as the partnership exists, any
of the partners may demand an accounting of
the partnership business. Prescription of the
176
Partnership
said right starts to run only upon the
dissolution of the partnership when the final
accounting is done (Emilio Emnace v. Court of
Appeals. G.R. No. 126334, November 23, 2001).
7. Right to have partnership dissolved under
certain conditions.
PROPERTY RIGHTS OF A PARTNER
1. Right to specific property (Art. 1811)
• contemplates tangible property
• The specific partnership property belongs
to the partnership. The partners have no
actual interest in it until after dissolution.
• Incidents of this co-ownership: (RAEL)
a. equal right with other partners to
possess specific partnership property
for partnership purposes
b. not assignable, except in connection
with the assignment of rights of all
partners in the same property
c. not subject to attachment or
execution, except on a claim against
the partnership
d. not subject to legal support
NOTE: Any immovable property or an interest
therein may be acquired in the partnership
name. The title so acquired may be conveyed
only in the partnership name subject to the
provisions of Article 1819 of the Civil Code.
2. Interest in the partnership (Art. 1812)
• share in the profits and surplus
• A partner owns his respective share.
Effects of conveyance by a partner of his
interest in the partnership (Art. 1813)
a. whole interest – partnership may
either remain or be dissolved
b. assignee does not necessarily
become a partner
c. assignee cannot interfere in the
management or administration.
d. assignee cannot demand
information, accounting and
inspection of the partnership books
• But entitles assignee to receive in
accordance with his contract the profits
which the assigning partner would
otherwise be entitled.
• In case of fraud in the management,
the assignee may avail himself of the
usual remedies.
MEMORY AID IN CIVIL LAW
Remedies of separate judgment creditor of
a partner (Art. 1814)
Application for a charging order after
securing judgment on his credit to subject
the interest of the debtor partner with
payment of unsatisfied amount of the
judgment debt
Redemption of interest charged (Art. 1814)
a. General partnership
iv. with separate property of a partner; or
v. with partnership property, with the
consent of all the partners whose
interests are not so charged or sold
b. Limited partnership (limited partner)
• with separate property of any general
partner but NOT with partnership
property
3. Right to participate in the management
OBLIGATIONS OF PARTNERS TO
THIRD PERSONS
LIABILITY FOR CONTRACTUAL OBLIGATIONS
(ART 1816)
1. All partners, including industrial partners, are
personally liable with all their property. Their
individual liability is pro rata and subsidiary,
unless otherwise stipulated
• stipulation against liability shall be VOID
except as among the partners (Art. 1817)
NOTE: Article 1799 provides “A stipulation
which excludes one or more partners from
any share in the profits or losses is void”.
Whereas, under Article 1817 the partners,
may stipulate among themselves that a
partner may be exempted from liability.
Reconciliation: Justice Paras opined that
insofar as capitalist partners are concerned, it
is permissible to stipulate among them that a
capitalist partner will be exempted from
liability in excess of the original capital
contributed; but will not be exempted insofar
as his capital is concerned.
2. Liability of partnership for acts of partners (Art.
1818)
a. Acts for apparently carrying on in the
usual way the business of the partnership
GENERAL RULE: Act binds the
partnership.
EXCEPTION: Partnership is not bound if:
i. acting partner has in fact no
authority and
ii. the third person knows that the
acting partner has no authority
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2008 CENTRALIZED BAR OPERATIONS

b. Acts of Strict Dominion or Ownership of partnership in the same manner as other

rules governing the agency relationship.
GENERAL RULE: Act does not bind the
partnership. Liability of Stockholders in a Defectively
Formed Corporation
EXCEPTION: Partnership is bound if:
Persons who attempt but fail to form a
i. the act is authorized by all the
corporation and carry on business under
partners; or
the corporate name become in legal effect
ii. they have abandoned the partners inter-se.
business
EXCEPTION: One who takes no part except to
One or more but less than all partners subscribe for stock in a proposed
have no authority to: (AGO-CESR) corporation, which was never legally
1. assign the partnership property in formed.
trust for creditors or on the
assignee’s promise to pay the
PRINCIPLE OF DELECTUS PERSONARUM
debts of the partnership
A rule inherent in partnership wherein no one can
2. dispose of the goodwill of the
become partner without the consent of all the
business
partners.
3. do any other act which would
NOTE: This is true only in case of a general
make it impossible to carry on the
partner, but NOT as regards a limited partner.
ordinary business of a partnership
4. confess a judgment
MUTUAL AGENCY
5. enter into a compromise
concerning a partnership claim or Partnership is a contract of “mutual agency”,
liability each partner acts as a principal on his own
behalf, and as an agent of his co-partners and
6. submit a partnership claim or
the partnership.
liability to arbitration
Requisites When A Partner Binds The
7. renounce a claim of the
Partnership
partnership
1. when he is expressly or impliedly
c. Acts in contravention of a restriction on
authorized
authority
• 2. when he acts in behalf and in the name of
Partnership is not liable to third
the partnership
persons having actual or presumptive
knowledge of the restrictions
PARTNERSHIP BY ESTOPPEL
LIABILITY ARISING FROM PARTNER’S TORT Arises when a person by any means represents
OR BREACH OF TRUST (Arts. 1822-23) himself or consents to another representing him to
anyone, as partner in an existing partnership, or
1. Where, by any wrongful act or omission of
with one or more persons not actual partners; he
any partner acting in the ordinary course
is liable to any such person to whom such
of business of the partnership or with
representation has been made, who has, on the
authority of his co-partners, loss or injury
faith of such representation given credit to the
is caused to a non-partner.
actual or apparent partnership (Art 1825).
2. Where one partner, acting within the scope
NOTE: Art. 1825 does not create a partnership as
of his apparent authority, receives money
between the alleged partners. The law only
or property of a third person and
considers them partners and the association as a
misapplies it
partnership insofar as it is favorable to third
3. Where the partnership, in the course of its persons. However, partnership liability is created
business, receives money or property and only in favor of persons who on the faith of such
it is misapplied by any partner while it is in representation given credit to the partnership
the custody of the former.
NOTE: All partners are solidarily liable with the
partnership for any penalty or damage arising
from a partnership tort or breach of trust (Art.
1824) This is an exception to Art. 1816, Liability
for Contractual Obligations.
The rule of respondeat superior (also called
the rule of vicarious liability) applies to the law
178 MEMORY AID IN CIVIL LAW
Partnership

Change in the relation of the partners caused by
any partner ceasing to be associated in carrying
on the business (Art. 1828).
NOTE: The dissolution of a partnership must not EFFECTS OF DISSOLUTION
be understood in the absolute and strict sense so
that at the termination of the object for which it
was created the partnership is extinguished (Testate
of Mota v. Serra. G.R. No. L-22825, February 14, 1925).
Dissolution does not automatically result in the GENERAL RULE: Dissolution terminates all
termination of the legal personality of the
partnership, nor the relations of the partners
among themselves who remain as co-partners
EXCEPTIONS:
until the partnership is terminated.
WINDING UP
Process of settling the partnership business or
affairs after dissolution.
Qualifications to the General Rule:
TERMINATION
1.
Point in time when all partnership affairs are
wound up or completed and is the end of the
partnership life.
CAUSES OF DISSOLUTION
1. Extrajudicial dissolution (Art. 1830) - the
parties may agree to expand the grounds
provided under Art 1830 but NOT to
delimit them.
2. Judicial dissolution (Art. 1831) - when so
decreed by the court, the presiding judge
may place the partnership under
receivership and direct an accounting to
be made towards winding up the
partnership affairs.
The court shall decree a dissolution whenever:
(BI2LOG)
(a) A partner has been declared insane in any
judicial proceeding or is shown to be of
unsound mind;
(b) A partner becomes in any other way
incapable of performing his part of the
partnership contract;
(c) A partner has been guilty of such conduct
as tends to affect prejudicially the carrying
on of the business;
(d) A partner willfully or persistently commits a 2.
breach of the partnership agreement, or
otherwise conducts himself in matters
relating to the partnership business that it
is not reasonably practicable to carry on
the business in partnership with him;
(e) The business of the partnership can only
be carried on at a loss;
Dissolution
(f) Other circumstances render a dissolution
equitable.
AS TO PARTNER’S AUTHORITY TO ACT FOR THE
PARTNERSHIP
authority of any partner to act for the
partnership
1. Acts necessary to wind up partnership
affairs
2. Acts necessary to complete transactions
begun but unfinished
With respect to the partners (in so far as
partners are concerned)
a) Dissolution is not by act, insolvency or
death of a partner: General Rule applies.
Hence, dissolution terminates the
ACTUAL authority of a partner to
undertake NEW business for the
partnership (Art. 1832)
b) Dissolution is by act, insolvency or death
of a partner:
GENERAL RULE: Authority of partners
inter se to act for the partnership is
NOT deemed terminated. Thus, each
partner is liable to his co-partners for
his share of any liability created by
any partner acting for the partnership
as if the partnership has not been
dissolved
EXCEPTIONS (Art. 1833):
1. The cause of dissolution is the
ACT of a partner and the acting
partner had KNOWLEDGE of
such dissolution
2. The cause of dissolution is the
DEATH or INSOLVENCY of a
partner and the acting partner had
KNOWLEDGE or NOTICE of
such dissolution
With respect to third persons
a. When partnership is bound to third
persons after dissolution (Art. 1834)
1) Act appropriate for winding up
partnership affairs
2) Act for completing unfinishe d
transactions
San Beda College of Law
3) Completely NEW transaction which
would bind the partnership if
dissolution had not taken place
provided: the other party is in good
faith, meaning:
i. Previous creditor (had previously
extended credit) AND he had NO
KNOWLEDGE or NOTICE of the
dissolution, OR
ii. NOT a previous creditor AND the
fact of dissolution had not been
published in a newspaper of
general circulation
b. When partnership is NOT bound to third
persons after dissolution
1) Where partnership was dissolved
because it was unlawful to carry on
the business, except when the act is
for winding up
2) Where the acting partner in the
transaction has become insolvent
3) Where the partner is unauthorized to
wind up, except if the transaction is
with third persons in good faith
(same circumstances as defined
above)
4) Where act is NOT appropriate for
winding up or for completing
unfinished transactions
5) completely NEW transaction which
would bind the partnership if
dissolution had not taken place with
third persons in bad faith
AS TO PARTNER’S EXISTING LIABILITY (Art. 1835)
GENERAL RULE: Dissolution does not
automatically discharge the existing liability of
any partner
EXCEPTION: A partner may be relieved from all
existing liabilities upon dissolution ONLY by an
agreement between:
1. Partner concerned
2. Other partners
3. Partnership creditors
Note: The consent of the creditors and partners to
the novation may be implied from their conduct.
RIGHTS OF A PARTNER UPON DISSOLUTION
(Art. 1837)
1. Dissolution is not in contravention of the
partnership agreement
a. have partnership property applied to
discharge partnership liabilities
b. receive in cash his share of the surplus
179
2008 CENTRALIZED BAR OPERATIONS
2. Dissolution is in contravention of the
partnership agreement
a. Rights of a partner who has not caused
the dissolution wrongfully
1) To have partnership property applied
to discharge partnership liabilities
2) To receive in cash his share of the
surplus
3) To be indemnified for damages
caused by the partner guilty of the
wrongful dissolution
4) To continue the business in the same
name during the agreed term of the
partnership, by themselves or jointly
with others
5) To possess partnership property
should they decide to continue the
business
b. Rights of a partner who has wrongfully
caused the dissolution
1) Business is not continued by the
other partners
i. To have partnership property
applied to discharge partnership
liabilities
ii. To receive in cash his share of
the surplus less damages
caused by his wrongful
dissolution
2) If the business is continued
i. To have the value of his interest
in the partnership at the time of
the dissolution, surplus less
damages caused by his wrongful
dissolution to his co-partners,
ascertained and paid in cash or
secured by a bond approved by
the court;
ii. To be released from all existing
and future liabilities
NOTE: The value of the goodwill of the business
is not considered in ascertaining the value of the
interest of the guilty partners.
R I G H T S O F A PA R T N E R W H E R E
PARTNERSHIP CONTRACT IS RESCINDED ON
THE GROUND OF FRAUD OR
MISREPRESENTATION (Art. 1838)
The following are the rights of the partner entitled
to rescind:
1. Right of LIEN on, or RETENTION of, the
surplus of partnership property after satisfying
partnership liabilities for any sum of money
paid or contributed by him
180
Partnership
3. Right of SUBROGATION in place of the
partnership creditors after payment of
partnership liabilities; and
4. Right of INDEMNIFICATION by the guilty
partner against all debts and liabilities of the
partnership
MANNER OF WINDING UP
1. Extrajudicial – by the partners
themselves without the intervention of the
court
2. Judicial – under the control and direction
of the court upon proper cause shown by
any partner, his legal representative or his
assignee
Persons Authorized to Wind Up (Art. 1836)
1. partners designated by the agreement
2. in the absence of such agreement, all
partners who have not wrongfully
dissolved the partnership
3. legal representative of last surviving
partner not insolvent
Assets of the Partnership [Art. 1839 (1)]
1. partnership property
2. contributions of the partners necessary for
the payment of al liabilities.
Order of Payment in Winding Up
1. General Partnership [Art. 1839 (2)]
a. those owing to creditors other than
partners
b. those owing to partners other than for
capital or profits
c. those owing to partners in respect of
capital
d. those owing to partners in respect of
profits
One formed by two or more persons having as
members one or more general partners and one
or more limited partners, the latter not being
personally liable for partnership debts (Art. 1843).
Characteristics of Limited Partnership
1. Limited partnership is formed by
substantial compliance in good faith with
the statutory requirements
2. One or more general partners control the
business and are personally liable to
creditors
MEMORY AID IN CIVIL LAW
2. Limited Partnership (Art. 1863)
a. those owing to creditors, except those to
limited partners on account of their
contribution, and to general partners
b. those owing to limited partners in respect
of their share of the profits and other
compensation by way of income
c. those owing to limited partners in respect
of their capital contributions
d. those owing to general partners other
than for capital and profits
e. those owing to general partners in
respect of profits
f. those owing to general partners in
respect of capital
DOCTRINE OF MARSHALING OF ASSETS [Art. 1839(8)]
1. Partnership creditors have preference in
partnership assets
2. Separate or individual creditors have
preference in separate or individual properties
3. Anything left from either goes to the other
PARTNER’S LIEN
Right of every partner to have the partnership
property applied to discharge partnership liabilities
AND to have the surplus assets, if any, distributed
in cash to the respective partners, after deducting
what may be due to the partnership from them as
partners.
NOTE: Art. 1842 speaks of accounting to be done
upon dissolution of the partnership. While Art.
1809 refers to a demand for accounting before
dissolution by reason of the circumstances
mentioned in the article.
Limited Partnership
3. One or more limited partners contribute to
the capital and share in the profits but do
not participate in the management of the
business and are not personally liable for
partnership obligations beyond the amount
of their capital contributions
4. The limited partners may ask for the return
of their capital contributions under the
conditions prescribed by law
5. The partnership debts are paid out of the
common fund and the individual properties
of the general partners.
San Beda College of Law 181
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Essential Requirements for Formation of Management of Limited Partnership

Limited Partnership
GENERAL RULE: Limited partner has no
1. A certificate or articles of limited management powers
partnership which states the matters
EXCEPTION: A general partner in a limited
enumerated in Article 1844, which must be
partnership however has no authority,
signed and sworn; and
without written consent or ratification of all
2. Such certificate must be filed for record in limited partners, to (Art. 1850): (CIC-PAAC)
the Office of the Securities and Exchange
1. Do any act in contravention of the
Commission.
certificate;
NOTE: A strict compliance with the legal
2. Do any act which would make it
requirements is not necessary. It is sufficient
impossible to carry on the ordinary
that there is substantial compliance in good
business of the partnership;
faith. If there is no substantial compliance, the
partnership becomes a general partnership as 3. Confess judgment against the
far as third persons are concerned, in which all partnership;
the members are liable as general partners (Jo 4. Possess partnership property, or
Chun v. Pacific Commercial Co. GR No. 19892. September assign their rights in specific
6, 1923). partnership property, for other that a
However, a firm which fails to substantially partnership purpose;
comply with the formal requirements of a 5. Admit a person as a general partner;
limited partnership is a general partnership
only as to its relations to third persons. The 6. Admit a person as a limited partner,
firm is a limited partnership, subject to all unless the right to do so is given in the
rules applicable to such partnership; and as certificate
between the partners they are bound by 7. Continue the business with the
their agreement; and that all the limited partnership property on the death,
partner’s relations to his co-partners and retirement, insanity, civil interdiction or
their obligations to him growing out of the insolvency of a general partner, unless
relation remain unimpaired. the right to do so is given in the
A partnership transacting business is, prima certificate.
facie, a general partnership and those who
seek to avail themselves of the protection Limited Partner/ General Partner/
of laws permitting the creation of limited Partnership Partnership
partnerships must show due compliance (R2EF-P2C2-TIME)
with such laws. 1. Rules governing dissolution and winding
Contributions of a limited partner: CASH or up
OTHER PROPERTY, but NOT SERVICES Governed by Art. 1839 Governed by Art.
(Art. 1845). 1863
• A partner may be a general partner and 2. Right to participate in the management of
a limited partner in the same partnership
partnership at the same time, provided
Limited partner has no General partners
that this fact shall be stated in the
share in the management have an equal right
certificate provided for in Article 1844
of a limited partnership and in the management
(Art. 1853).
renders himself liable to of the business
SURNAME of a limited partner shall not partnership creditors as a (when the manner of
appear in the partnership name unless: general partner if he takes management has
a. It is also the name of a general partner, part in the control of the not been agreed
or business upon)
3. Extent of liability
b. Prior to the time when the limited
partner became such, the business Limited partner’s liability General partner is
had been carried on under a name in extends only to his capital personally liable for
which his surname appeared (Art. contribution partnership
1846). obligations
Violation of such will make the limited partner 4. Firm name
liable to partnership creditors without Firm name must be No such requirement
however, the rights of a general partner. followed by the word
Limited
182
Partnership
Limited Partner/
Partnership
5. Proper party to proceedings by or against
the partnership
Limited partner is not a
proper party to
proceedings by or against
a partnership Unless:
1.he is also a general
partner, or
2.where the object of the
proceeding is to enforce
a limited partner’s right
against or liability to the
partnership
6. Prohibition to engage in other business
No such prohibition in the
case of a limited partner
who is considered a mere
contributor to the
partnership
7. Contribution
Limited partner must
contribute cash or property
to the partnership but not
services
8. Creation
Limited partnership is
created by the members
after substantial
compliance in good faith
with the requirements set
forth by law
9. Transferability of interest
Limited partner’s interest is
freely assignable, with
assignee acquiring all the
rights of the limited partner
subject to certain
qualifications
10. Inclusion of partner’s name in the firm
name
As a general rule, name of Name of a general
a limited partner must not partner may appear
appear in the firm name in the firm name
MEMORY AID IN CIVIL LAW
General Partner/ Limited Partner/ General Partner/
Partnership Partnership Partnership
11. Members of the partnership
Composed of one or more Composed only of
General partner is general partners and one general partners
the proper party to or more limited partners
proceedings by or 12. Effect of retirement, death, insanity or
against a partnership insolvency
Retirement, death, insanity Retirement, death,
or insolvency of a limited insanity or
partner does not dissolve insolvency of a
the partnership for his general partner
executor or administrator dissolves the
shall have the rights of a partnership
limited partner for the
purpose of selling his
General partner is estate
prohibited from
engaging in a
business which is of Rights of a Limited Partner (BIF2AR2)
the SAME kind of
business in which 1. To have the partnership books kept at the
the partnership is principal place of business of the
engaged, if he is a partnership (Art. 1851)
capitalist partner, or 2. To inspect, at a reasonable hour,
in ANY of business partnership books and copy any of them
for himself if he is an (Art. 1851)
industrial partner
3. To demand true and full information of the
things affecting the partnership (Art. 1851)
General partner may 4. To demand a formal account of the
contribute money, partnership affairs whenever
property or industry circumstances render it just and
to the partnership reasonable (Art. 1851)
5. To ask for dissolution and winding up by
General partnership, decree of court (Art. 1851)
as a general rule,
6. To receive a share in the profits or other
may be constituted
compensation by way of income
in any form by
provided: that the partnership assets are
contract or conduct
in excess of partnership liabilities after
of the partnership
such payment (Art. 1856)
7. To receive the return of his contribution
General partner’s provided (Art. 1857):
interest in the
partnership may not a. All the liabilities of the partnership
be assigned as to have been paid OR the partnership
make the assignee a assets are sufficient to pay
new partner without partnership liabilities
the consent of the b. The consent of all the members
other partners, (general and limited partners) has
although he may been obtained
associate a third
person with him in EXCEPTION:
his share When the return of the contribution
may be rightfully demanded:
1) On the dissolution of the
partnership
2) Upon the arrival of the date
specified in the certificate for the
return
San Beda College of Law
3) After he has given 6 months
notice in writing to all other
partners, if no time is specified in
the certificate their for the return
of the contribution or for the
dissolution of the partnership
c. The certificate is cancelled or so
amended as to set forth the
withdrawal or reduction
Allowable Transactions of a Limited Partner
(Art. 1854)
1. transacting other business with the
partnership
2. receiving a pro rata share of the
partnership assets with the general
creditors if he is NOT also a general
partner
NOTE: In transacting a business with the
partnership as a non-member, the limited
partner is considered a non-partner creditor
Prohibited Transactions of a Limited Partner
(Art. 1854)
1. receiving or holding as collateral security
any partnership property; or
2. receiving any payment, conveyance, or
release from liability if it will prejudice the
partnership creditors
NOTES: Violation of the prohibition will give
rise to the presumption that it has been made
to defraud partnership creditors
The prohibition is NOT ABSOLUTE, there is
no such prohibition if the partnership assets
are sufficient to discharge partnership liabilities
to persons not claiming as general or limited
partners.
Liabilities of a Limited Partner (Art. 1858)
1. Liability for unpaid contribution
a. For the difference between his
contribution as actually made and that
stated in the certificate as having been
made; AND
b. For any unpaid contribution which he
has agreed in the certificate to make
in the future at the time and the
conditions stated in the certificate
2. Liability as trustee
a. Specific property stated in the
certificate as contributed by him, but
which was not contributed or which
has been wrongfully returned; AND
b. Money or other property wrongfully
paid or conveyed to him on account of
his contribution
NOTE: These liabilities can be waived or
compromised only by consent of ALL the
members; but a waiver or compromise shall
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2008 CENTRALIZED BAR OPERATIONS
NOT affect the right of a creditor of a
partnership who extended credit or whose
claim arose after the filling and before the
cancellation or amendment of the certificate, to
enforce such liabilities.
SUBSTITUTED LIMITED PARTNER (Art. 1859)
A person admitted to all the rights of a limited
partner who has died of has assigned his
interest in the partnership.
GENERAL RULE: He has all, the rights and
powers, and is subject to all the restrictions
and liabilities of his assignor.
EXCEPTION: Those liabilities which he was
ignorant at the time he became a limited
partner AND which could not be ascertained
from the certificate.
Requisites in Order That The Assignee May
Become A Substituted Limited Partner
1. All the members must consent to the
assignee becoming a substituted limited
partner, OR the limited partner, being
empowered by the certificate must give
the assignee the right to become a limited
partner
2. The certificate must be amended in
accordance with Art. 1865
3. The certificate as amended must be
registered in the Securities and Exchange
Commission
Dissolution of a Limited Partnership (Art. 1860):
1. retirement, death, insolvency, insanity, or
civil interdiction of a GENERAL PARTNER
• unless the business is continued by
remaining general partners
• under a right so to do stated in the
certificate
• with the consent of al members
2. when all limited partners ceased to be
such (Art. 1864, par. 1)
3. expiration of the term or period of
existence of the partnership (Art. 1844, par.
1)
4. by agreement of all partners before the
lapse of the period of existence;
5. misconduct of a general partner or fraud
committed by a general partner against
the limited partner/s
6. when the limited partner demanded the
return of his contribution but same was
unjustifiably denied.
• NOT EXCLUSIVE
NOTE: the executor or administrator of the
estate of the deceased LIMITED PARTNER
184 MEMORY AID IN CIVIL LAW
Partnership

shall acquire all the rights of a limited partner
for the purpose of settling the estate (Art. 1861).
the estate of the deceased limited partner
shall be liable for all his obligations or liabilities
to the partnership as a limited partner.
Liquidation of Limited Partnership (Art. 1863)
Order of priority in the payment of the liabilities
of the limited partnership:
1. those owing to creditors, in order of priority
as provided by law, except those to limited
partners on account of their contributions
and to general partners.
2. those owing to limited partners in respect
to their share of the profits and other
compensation by way of income on their
contributions.
3. those owing to limited partners in respect
to the capital of their contributions.
4. those owing to general partners other than
for capital and profits.
5. those owing to general partners in respect
to profits.
6. those owing to general partners in respect
to capital.
Cancellation of Certificate or Articles of
Partnership (Art. 1864):
1. when the partnership is dissolved.
2. when all the limited partners ceased to be
such.
Amendment of Certificate or Articles of
Partnership
! in case any of the ten enumerated
changes and circumstances in Article
1864, par. 2 are present.
! must be signed and sworn to by all the
members including the new members if
some are added; in case of substitution,
the assigning limited partner must also
sign.
! cancellation or amendment must be
recorded in the SEC.
! L I M I T E D PA R T N E R I S A M E R E
CONTRIBUTOR, hence, he CANNOT be a
proper party in a case for or against the
partnership (Art. 1866).
• unless the action is to enforce his
individual rights against the
partnership as authorized in Art. 1851.
• he can be a defendant on an action
filed against him by the partnership to
enforce his liability to the latter (Art.
1858)

Agency
Agency
Contract of Agency
A contract whereby a person (agent) binds The parties to the contract are:
himself to render some service or to do something
1. Principal - one whom the agent
in representation or on behalf of another
represents and from whom he derives
(principal), with the consent or authority of the
authority;
latter (Art. 1868).
2. Agent - one who acts for and represents
another.
Characteristics of an agency contract: (PF-
BORN)
AGENCY AND LEASE OF SERVICES DISTINGUISHED
1. Preparatory
2. Fiduciary AGENCY LEASE OF SERVICES
3. Bilateral Principle of Principle of employment
representation is is applied.
4. Onerous (generally) applied.
5. Representative Relation Extinguished at will of Concurrence of parties is
6. Nominate the principal. necessary.
San Beda College of Law 185
2008 CENTRALIZED BAR OPERATIONS

AGENCY LEASE OF SERVICES 3. CAUSE: may be onerous or gratuitous but

presumed for compensation (Art. 1875)
Agent exercise Employee exercise
discretionary power. ministerial functions only. NOTE: The agent may not be deprived of his
right to compensation by an unjustified
Preparatory Contract Principal Contract
revocation of the agency.
AGENCY TO SELL AND SALE DISTINGUISHED Kinds of Agency (C2ANE)
AGENCY TO SELL SALE 1. as to manner of creation
Agent receives the The buyer receives a. express
goods as the goods of goods as owner b. implied
the principal.
2. as to its character
Agent delivers the Buyer pays the price.
proceeds of the sale a. gratuitous
Agent can return the the buyer, as a rule, b. compensated or onerous.
object in case he is cannot return the object
3. as to authority conferred
unable to sell it sold
a. couched in general terms only acts of
Bound to act according The buyer can deal with
administration;
to the instructions of his the thing as he please
principal. being the owner. b. couched in specific terms
4. as to its nature and effects

Purpose of Agency a. ostensible / representative - agent

To extend the personality of the principal
through the facility of the agent. It enables the
activity of man which is naturally limited in its
exercise by the impositions of his physiological
conditions to be legally extended by permitting
him to be constructively present in many
different places and to perform diverse juridical
acts and carry on many different activities
through another when physical presence is
impossible or inadvisable at the same time (11
Manresa 434).
Elements of Agency
1. CONSENT
• Express or implied
• Any person or entity having juridical
capacity and capacity to act and not
otherwise disqualified, may enter into
an agency
• But as regards the party with whom
the agent acts or contracts, the legal
capacity of the principal rather than
the agent, is of the greater import.
2. OBJECT: execution of a juridical act in
relation to a third person.
• May cover all acts pertaining to a
business of the principal (general
agency) or one or more specific
transactions (special agency)
• The extent of the agent’s authority to
act, whether it be a general or a
special agency, depends on how the
agency is couched.
acts in the name and in representation
of the principal.
b. simple / commission - agent acts in
his own name but for the account of
the principal.
5. as to extent of business covered
a. general
b. special
Acts which may be delegated to an Agent
GENERAL RULE: What a man may do in
person, he may do thru another.
EXCEPTIONS:
1. Personal acts
2. Criminal Acts / Acts not allowed by law
Form of Agency
1. express
2. implied
• from the acts of the principal
• from his silence or lack of action
• failure to repudiate the agency
knowing that another person is acting
on his behalf without authority (Art.
1869).
NOTE: In an implied agency, the principal
is still bound by the acts of the agent just
as in case of express agency
GENERAL RULE: There are no formal
requirements governing the appointment of
an agent.
EXCEPTION: When the law requires a specific
form (e.g. sale of a piece of land thru an
agent: authority of the agent shall be in
186 MEMORY AID IN CIVIL LAW
Partnership

writing, otherwise, the sale is void) (Art. acts, connected with a particular trade,
1874). business or employment.
3. Special or Particular Agent - one
authorized to act in one or more specific
FORM OF ACCEPTANCE BY AGENT
transactions, or to do one or more specific
1. EXPRESS acts, or to act upon a particular occasion.
2. IMPLIED General and Special Agent Distinguished
• from his acts which carry out the agency General Agent Special Agent
• from his silence or inaction according to (SEC2T)
the circumstances.
1. Scope of Authority
Kinds of Implied Acceptance
Usually authorized to Authorized to do only
1. Where persons are present (Art. 1871) do all acts connected acts in pursuance of
with the business or particular instructions or
a. principal delivers his power of
employment in which with restrictions
attorney to the agent and
he is engaged. necessarily implied from
b. agent receives it without any the acts to be done
objection 3. Extent by which agent may bind principal
2. Where persons are absent (Art. 1872) Binds his principal by Cannot bind his principal
GENERAL RULE: Acceptance cannot be an act within the scope in a manner beyond or
implied from silence of the agent of his authority outside the specific acts
although it may be which he is authorized to
EXCEPTION: contrary to his special perform on behalf of the
1. principal transmits his power of attorney instructions principal
to the agent, who receives it without any 3. Continuity
objection;
Conducts a series of Usually involves a single
2. principal entrusts to him by letter or transactions involving transaction or a series of
telegram a power of attorney with a continuity of service. transactions not
respect to the business in which he is involving continuity
habitually engaged as an agent, and he
did not reply to the letter or telegram 4. Construction of Instructions of Principal
Statement of principal Authority of agent must
with respect to the be strictly pursued
RULE ON AGENCY BY ESTOPPEL agent’s authority would
One who clothes another with apparent ordinarily regarded as
authority as his agent, and holds him out to the advisory only
public as such, cannot be permitted to deny 5. Termination of Authority
the authority of such person in good faith, and
Apparent authority Mere revocation is
in the honest belief that he is what he appears
does not terminate by effective to terminate the
to be (Cuison v. CA, GR No.88531. October 26, 1993).
the mere revocation of authority as to third
Notice: his authority without persons because the
notice to the third party third person has a duty
a. by special information
to inquire
b. by public advertisement
Manner of Termination or Rescission: notice/
information or advertisement had been SPECIAL POWER OF ATTORNEY (SPA)
rescinded in the same manner it is given (Art. An instrument in writing by which one person,
1873). as principal, appoints another as his agent and
confers upon him the authority to perform
certain specified acts or kinds of acts on behalf
CLASSES AND KINDS OF AGENTS of the principal.
1. Universal Agent - one employed to do all NOTE: It need not be notarized; except where
acts that the principal may personally do, it is executed in a foreign country, must be
and which he can lawfully delegate to certified in accordance with the Rules of Court.
another the power of doing.
Instances Where SPA is Necessary (Art. 1878)
2. General Agent - one employed to transact (PECWEM-LLB-BOCARO)
all the business of the principal, or all the
business of a particular kind or in a 1. To make payments as are not usually
particular place, or in other words to do all considered as acts of administration;
San Beda College of Law
2. To effect novation which put an end to
obligations already in existence at time the
agency was constituted;
3. To compromise, submit questions to
arbitration ,renounce the right to appeal
from a judgment, waive objections to the
venue of an action or abandon a
prescription already acquired;
4. To waive any obligation gratuitously;
5. To enter into any contract by which the
ownership of an immovable is transmitted
or acquired either gratuitously or not;
6. To make gifts, except customary ones for
charity or those made to employees in the
business managed by the agents;
7. To loan or borrow money, unless the
latter’s act be urgent and indispensable for
the preservation of the things which are
under administration;
8. To lease any real property to another
person for more than one year;
9. To bind the principal to render some
service without compensation;
10. To bind the principal in a contract of
partnership;
11. To obligate the principal as guarantor or
surety;
12. To create or convey real rights over
immovable property;
13. To accept or repudiate an inheritance;
14. To ratify or recognize obligations
contracted before the agency;
15. Any other act of strict dominion.
NOTE: A third person with whom the agent
wishes to contract on behalf of the principal
may require the presentation of the power of
attorney or the instructions as regards the
agency; except private or secret orders.
The scope of the agent’s authority is what
appears in the written terms of the power of
attorney. While third persons are bound to
inquire into the extent or scope of the
agent’s authority, they are not required to
go beyond the terms of the written power of
attorney. Third persons cannot be
adversely affected by an understanding
between the principal and his agent as to
the limits of the latter’s authority. In the
same way, third persons need not concern
themselves with instructions given by the
principal to his agent outside the written
power of attorney (Siredy Enterprises, Inc. v. CA,
et al. GR No. 129039. September 27, 2002).
• SPA to sell does not include the power
to mortgage; and vice versa (Art. 1879).
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• SPA to mortgage includes the power to
allow the extrajudicial foreclosure of
the mortgaged property (Art. 1879).
• SPA to compromise does not authorize
submission to arbitration (Art. 1880).
Effect of Lack of SPA Where One is Required:
UNENFORCEABLE
When principal bound by act of agent
1. Agent must act within the scope of his
authority (Art. 1881).
2. Agent must act in behalf of the principal
NOTE: The limits of the agent’s authority shall
not be considered exceeded should it have
been performed in a manner more
advantageous to the principal than that
specified by him (Art. 1882).
When a person NOT bound by act of
another
1. Latter acts without or beyond the scope of
his authority in the former’s name; and
2. Latter acts within the scope of his authority
but in his own name (UNDISCLOSED
PRINCIPAL), except when the transaction
involves a thing belonging to the principal
(Art. 1883).
Effects of Agent’s Acts
1. With Authority
a. in principal’s name – valid; principal is
bound; agent not personally liable
unless he bound himself (Art. 1897)
b. in his own name – Apply Art. 1883;
generally not binding on the
principal; agent and stranger are the
only parties, except regarding things
belonging to the principal or when the
principal ratifies the contract or
derives benefit therefrom.
2. Without Authority
a. in principal’s name – unauthorized &
unenforceable but may be ratified, in
which case, may be validated
retroactively from the beginning (Art.
1407)
b. in his own name – valid, whether or
not the subject matter belongs to the
principal, provided that at the time of
delivery, the “agent” can transfer
legally the ownership of the thing.
Otherwise, he will be held liable for
breach of warranty against eviction;
Art. 1883 does NOT apply
188
Partnership
Occasions When Principal is Bound By The
Acts Of The Agent Beyond The Latter’s
Powers
1. Where the principal’s acts have
contributed to deceive the third persons;
2. Where the limitations upon the power
created by him could not have been
known by the third person;
3. Where the principal has placed in the
hands of the agent instruments signed by
him in blank
4. Where the principal has ratified the acts of
the agent.
DOCTRINE OF AGENCY BY NECESSITY
By virtue of the existence of an emergency, the
authority of an agent is correspondingly
General Obligations of Agent to Principal:
1. To act with utmost good faith and loyalty
for furtherance of principal’s interests
2. To obey all lawful orders and instructions
of principal within the scope of the agency
3. To exercise reasonable care, skill and
diligence
Specific Obligations of Agent To Principal
(CAFO-A2DALAR–PD-IBIR)
1. To carry out the agency which he has
accepted (Art. 1884)
2. To answer for damages which through his
performance the principal may suffer (Art.
1884)
3. To finish the business already begun on
the death of the principal should delay
entail any danger (Art. 1884)
4. To observe diligence of a good father of a
family in the custody and preservation of
the goods forwarded to him by the owner
in case he declines an agency, until an
agent is appointed (Art. 1885)
5. To advance the necessary funds should
there be a stipulation to do so (Art. 1886)
6. To act in accordance with the instructions
of the principal, and in default thereof, to
do all that a good father of a family would
do (Art. 1887)
7. Not to carry out the agency if its execution
would manifestly result in loss or damage
to the principal (Art. 1888)
8. To answer for damages if there being a
conflict between his interest and those of
MEMORY AID IN CIVIL LAW
enlarged in order to cope with the exigencies
or the necessities of the moment
Requisites:
1. Real existence of an emergency
2. Inability of the agent to communicate with
the principal
3. Exercise of the additional authority for the
principal’s own protection
4. Adoption of fairly reasonable means,
premises duly considered
NOTE: Agency can never be created by
necessity; what is created is additional authority in
an agent appointed and authorized before the
emergency arose.
Obligations of the Agent
the principal, he should prefer his own (Art.
1889)
9. Not to loan to himself if he has been
authorized to lend money at interest (Art.
1890)
10. To render an account of his transactions
and to deliver to the principal whatever he
may have received by virtue of the agency
(Art. 1891)
NOTE: A stipulation exempting the agent
from the obligation to render an account
shall be VOID (Art. 1891).
11. To be responsible in certain cases for the
acts of the substitute appointed by him
(Art. 1892)
12. To pay interest on funds he has applied to
his own use (Art. 1896) - from the day on
which he did so and on those which he still
owes after the extinguishment of the
agency.
13. To distinguish goods by countermarks and
designate the merchandise respectively
belonging to each principal, in the case of
a commission agent who handles goods of
the same kind and mark, which belong to
different owners (Art. 1904)
14. To inform the principal, where an
authorized sale of credit has been made,
of such sale (Art. 1906)
15. To bear the risk of collection, should he
receive also on sale, a guarantee
commission (Art. 1907)
16. To indemnify the principal for damages for
his failure to collect the credits of his
principal at the time that they become due
(Art. 1908)
San Beda College of Law
17. To be responsible for fraud or negligence
(Art. 1909)
GENERAL RULE: Knowledge of agent is
knowledge of principal.
EXCEPTIONS:
1. Agent’s interests are adverse to those of the
principal
2. Agent’s duty is not to disclose the information
3. Where the person claiming the benefit of the
rule colludes with the agent to defraud the
principal
SUB-AGENT
A person to whom the agent delegates, as his
agent, the performance of an act for the
principal which the agent has been
empowered to perform through his
representative.
NOTE: The agent may appoint a substitute
except when he has been prohibited by the
principal (Art. 1892).
Instances when agent shall be responsible for
the acts of the substitute:
1. he is not given the power to appoint;
2. he was given such power but without
designating the person, and the person
appointed was notoriously incompetent or
insolvent.
• In these two cases the principal may
further bring an action against the
substitute with respect to the obligations
which the latter has contracted under the
substitution (Art. 1893).
NOTE: All acts of the substitute appointed
against the prohibition of the principal shall be
VOID.
JOINT AGENTS
Agents appointed by one or more principals under
such circumstances as to induce the inference
that it was the principal’s intent that all should act
in conjunction in consummating the transaction for
which they were appointed.
• Their responsibility is JOINT; except if
solidarity has been expressly stipulated
(Art. 1894).
• If solidarity has been agreed upon, each
agent is responsible for the:
a. non-fulfillment of the agency
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2008 CENTRALIZED BAR OPERATIONS
b. fault or negligence of his fellow
agents; except when the fellow agents
acted beyond the scope of their
authority (Art. 1895).
NOTE: An innocent agent has a right later on
to recover from the guilty or negligent agent
[Art. 1217(2)]
Instances when agent may incur personal
liability (Art. 1897):
1. Agent expressly binds himself
NOTE: The individual liability of the agent
can be considered a further security in
favor of the creditor and does not affect or
preclude the liability of the principal; both
are liable
2. Agent exceeds his authority
if the principal does not ratify the contract,
it shall be VOID if the party with whom
the agent contracted is aware of the
limits of the powers granted by the
principal/
agent is liable if he undertook to secure
the principal’s ratification (Art. 1898).
3. Acts of the agent prevents performance on
the part of the principal
4. When a person acts as an agent without
authority or without a principal
5. A person who acts as an agent of an
incapacitated principal unless the third
party was aware of the incapacity at the
time of the making of the contract
Scope of Agent’s Authority As To Third
Persons (Art. 1900)
includes not only the actual authorization
conferred upon the agent by his principal, but
also that which has apparently or impliedly
delegated to him.
1. where authority NOT in writing.
every person dealing with an assumed
agent is put upon inquiry and must
discover upon his peril, if he would hold
the principal liable, not only the fact of the
agency but the nature and extent of the
authority of the agent.
2. where authority in writing.
such person is not required to inquire
further than the terms of the written power
of attorney.
NOTE: A third person with whom the agent
wishes to contract on behalf of the principal
may require the presentation of the power of
attorney, or the instructions as regards the
agency (Art. 1902).
190
Partnership
FACTOR/COMMISSION AGENT
one engaged in the purchase and sale for a
principal of personal property, which for this
purpose, has to be placed in his possession and
at his disposal.
• If the commission agent received goods
consigned to him, he is responsible for any
damage or deterioration suffered by the same
in the terms and conditions and as described
in the consignment (Art. 1903).
• The commission agent who handles goods of
the same kind and mark, which belong to
different owners, shall distinguish them by
countermarks, and designate the
merchandise respectively belonging to each
principal (Art. 1904).
• A commission agent can sell on credit only
with the express or implied consent of the
principal. If such sale is made without
authority, the principal is given two
alternatives (Art. 1905):
i. He may require payment in cash, in which
case any interest or benefit from the sale
on credit shall belong to the agent since
the principal cannot be allowed to enrich
himself at the agent’s expense;
ii. He may ratify the sale on credit in which
case it will have all the risks and
advantages to him.
• If the commission agent is authorized to sell
on credit, he shall inform the principal with a
statement of the names of the buyers. With
such statement, the sale shall be deemed to
be for cash as far as the principal is
concerned (Art. 1906).
• The commission agent who does not collect
the credits of his principal at the time when
they become due and demandable shall be
liable for damages, unless he proves the
exercise of due diligence for that purpose (Art.
1908).
Obligations of the Principal
General Obligations of Principal To Agent
Duties and liabilities of the principal are
primarily based upon the contract and the
validity of the contract between them
Specific Obligations of Principal To Agent
(CARIP)
1. To comply with all the obligations which
the agent may have contracted within the
scope of his authority and in the name of
the principal (Art. 1910)
2. To advance to the agent, should the latter
so request, the sums necessary for the
execution of the agency (Art. 1912)
MEMORY AID IN CIVIL LAW
BROKER
A middleman or intermediary who, in behalf of
others and for a commission or fee, negotiates
contracts/transactions relating to real or personal
property.
FACTORAGE
Compensation of a factor or commission agent.
ORDINARY COMMISSION
Compensation for the sale of goods which are
placed in his possession or at his disposal.
GUARANTY COMMISSION (DEL CREDERE) (Art. 1907)
Fee, in addition to the ordinary commission
agreed upon, that is given in return for the risk,
which the agent has to bear in the collection of
credits.
• An agent with a del credere commission is
liable to the principal if the buyer fails to pay
or is incapable of paying.
• Either the principal or the del credere agent
may sue the buyer. The suit of one will bar the
subsequent suit of the other.
DOCTRINE OF PROCURING CAUSE
In order for an agent to be entitled to a
commission, he must be the procuring cause
of the sale, which simply means that the
measures employed by him and the efforts he
exerted must result in the sale (Ramos v. CA, G.R.
No. 25463, April 4, 1975).
However, for the purpose of EQUITY, an agent
who is not the efficient procuring cause is
nonetheless entitled to his commission, where
he, notwithstanding the expiration of his
commission, nonetheless took diligent steps to
bring back together the parties, such that a
sale was consummated (Prats v. CA, GR No.
39822, January 31, 1978).
3. To reimburse the agent for what the latter
has advanced (plus interest), even if the
business was not successful, provided the
agent was free from fault (Art. 1912)
4. To indemnify the agent for all the
damages, which the execution of the
agency may have caused the latter without
fault or negligence on his part (Art. 1913)
NOTE: The agent may retain in pledge the
things which are the object of the agency
until the principal effects this
reimbursement and pays the indemnity
(Art. 1914).
San Beda College of Law
5. To pay the agent the compensation
agreed upon, or if no compensation was
specified, the reasonable value of the
agent’s services
Liability of Principal For Tort of Agent Rule:
• The principal is civilly liable to third
persons for torts of an agent committed at
the principal’s direction or in the course
and within the scope of the agent’s
authority (Art. 1911).
• PRINCIPAL OF APPARENT AUTHORITY
Reason for liability: The rule is based upon
the principle that he who does an act
through another does it himself.
Conditions For Ratification
1. principal must have capacity and power to
ratify
2. principal must have had knowledge of
material facts
3. principal must ratify the acts in its entirety
4. act must be capable of ratification
5. act must be done in behalf of the principal
ESTOPPEL BY PRINCIPAL
Where the principal, by his culpable negligence,
permits his agent to exercise power not granted to
him, even though the principal has no notice or
knowledge of the conduct of the agent.
• Even when the agent has exceeded his
authority, the principal is solidarily liable with
the agent if the former allowed the latter to act
as though he had full powers.
JOINT PRINCIPALS
Two or more persons who appoint an agent for
a common transaction or undertaking.
Modes of Extinguishment of Agency (Art. 1919)
(EDWARD)
1. Expiration of the period
2. Death, civil interdiction, insanity or insolvency
of the principal or of the agent
3. Withdrawal of the agent
agent may withdraw by giving notice to the
principal, but must indemnify the principal for
damages that he may suffer by reason of
such withdrawal.
4. Accomplishment of the object or the purpose
of the agency
5. Revocation
191
2008 CENTRALIZED BAR OPERATIONS
Liability: solidarily liable to the agent for all the
consequences of the agency (Art. 1915).
Requisites of Solidary Liability:
1. There are two or more principals
2. The principals have all concurred in the
appointment of the same agent; and
3. The agent is appointed for a common
transaction or undertaking
NOTE: Any one of them may revoke the agency
RULES ON DOUBLE SALE BY PRINCIPAL AND AGENT
1 When two persons contract with regard to the
same thing, one of them with the agent and
the other with the principal, and the two
contracts are incompatible with each other,
that of prior date shall be preferred, without
prejudice to Art. 1544 (double sale) (Art. 1916).
2 If the agent has acted in good faith, the
principal shall be liable in damages to the
third person whose contract must be rejected.
If the agent is in bad faith, he alone shall be
responsible (Art. 1917).
Instances when principal is not liable for the
expenses incurred by the agent (Art. 1918):
1. if the agent acted in contravention of the
principal’s instructions, unless the latter
should wish to avail himself of the benefits
derived from the contract;
2. when the expenses were due to the fault of
the agent;
3. when the agent incurred them with knowledge
that an unfavorable result would ensure, if the
principal was not aware thereof;
4. when it was stipulated that the expenses
would be borne by the agent, or that the latter
would be allowed only a certain sum.
6. Dissolution of the firm or corporation, which
entrusted or accepted the agency.
Revocation of Agency by Principal
GENERAL RULE: Agency is revocable at will
of the principal, regardless of the term of
the agreement.
EXCEPTIONS (Art. 1927):
1. If a bilateral contract depends upon it;
2. If it is the means of fulfilling an
obligation already contracted;
192 MEMORY AID IN CIVIL LAW
Partnership

3. If a partner is appointed manager of a agent, where he had previously granted a

partnership and his termination is general power of attorney to one agent
unjustifiable; and (Art. 1926).
4. If it is created not only for the interest Agent May Withdraw From the Agency
of the principal but also for the interest
1. must give notice to the principal
of third persons, who have accepted
the stipulation in their favor 2. must indemnify should the principal suffer
damages by reason of the withdrawal
• AGENCY FOR PURPOSE OF
unless the agent should base his
CONTRACTING WITH SPECIFIED
withdrawal from the impossibility of
THIRD PERSONS – must be timely
continuing the performance of the agency
notified of the revocation (Art. 1921)
without grave detriment to himself (Art.
• Agents with general powers : revocation of 1928).
the agency does not prejudice third
Instances when death of principal does not
persons who acted in good faith and
terminate agency
without knowledge of the revocation
1. If the agency has been constituted in the
• Notice in a newspaper of general
common interest of the principal and the
circulation is a sufficient warning to third
agent (Art. 1930)
persons (Art. 1922).
2. If it has been constituted in the interest of
Implied Revocation may be Effected:
a third person who has accepted the
1. By the act of the principal in appointing stipulation in his favor (Art. 1931)
another agent for the same business or
transaction (Art. 1923);
AGENCY COUPLED WITH AN INTEREST: Refers to an
2. By the act of the principal in directly
agency wherein the agent has acquired some
managing the business entrusted to the
interest of his own in the execution of the authority
agent (Art. 1924); or
granted to him, in addition to his mere interest in
3. By the act the principal in subsequently the contract of employment with the resulting
granting a special power of attorney as gains.
regards the same business to another

Trusts
Trusts
A legal relationship between one person having an death of the trustor or during his life, it may
equitable ownership in property and another be either:
owning the legal title to such property.
a. testamentary trusts
b. trusts inter vivos (sometimes called
TRUST AND CONTRACT DISTINGUISHED “living trusts”)

TRUST CONTRACT 2. As to Creation - from the viewpoint of the

creative force bringing them into
Always involves owner- A legal obligation based existence, it may be either:
ship, embracing a set on an undertaking
of rights and duties supported by a Express trust - created by the intention of
fiduciary in character consideration, which the trustor or of the parties
which may be created obligation may or may Implied trust - one which comes into
by a declaration without not be fiduciary in being by operation of law. This may be
consideration. character. either:
a. Resulting trust - one in which the
intention to create a trust is
Classifications of Trusts presumed by law to exist from the
1. As to Effectivity - from the viewpoint of transaction and facts of the case
whether they become effective after the b. Constructive trust - one imposed
by law irrespective of and even
San Beda College of Law 193
2008 CENTRALIZED BAR OPERATIONS

contrary to the intention of the Proof of Trust

parties. It is designed to promote
GENERAL RULE: trust whether express or
justice, frustrate fraud and prevent
implied may be proved by parol or oral
unjust enrichment.
evidence
Persons involved in the trust:
EXCEPTION: An express trust over an
1. Trustor - the one who intentionally creates immovable property or any interest therein.
a trust This latter requirement however is not for
validity but only for purposes of proof.
2. Trustee - the person who holds the legal
title to the trust property for the benefit of NOTES: Trusts cannot be established in
another and with certain powers and violation of law. Trust is founded in equity such
subject to certain duties that it cannot result from a contract formed for
an illegal purpose.
3. Beneficiary or the cestui que trust - the
one who has the equitable interest in the Neither may a trust be created for the
property and enjoys the benefit of purpose of evading a legal prohibition.
administration by the trustee. He may be a Example: there cannot be a trust created for
natural person or a legal entity. The trustor the purpose of obtaining homestead patents, in
may establish a trust with himself as the favor of a person already disqualified to obtain
beneficiary (usual case). additional homesteads.
Elements of Express Trust Necessity of Acceptance to the creation and
validity of trust relationship
1. Competent trustor and trustee;
1. Acceptance of the trustee
2. Ascertainable trust res; and
The acceptance of the trustee is not
3. Sufficiently certain beneficiaries.
necessary to its existence and validity
since if he declines, the courts will appoint
TRUST AND DONATION DISTINGUISHED a trustee to fill the office that he declines
(see Sec. 3 Rule 98 of the Rules of Court).
TRUST DONATION NOTE: But a trustee’s acceptance of the
1. An existing legal 1. There is a transfer trust is necessary to charge him with the
relationship and involves of property as well as office of the trustee and the administration
the separation of legal the disposition of both of the trust and to vest the legal title in
and equitable title legal and equitable him.
ownership except in 2. Acceptance of the beneficiary
cases of gifts in trust.
The acceptance by the beneficiary is
2. The beneficiary of a 2. The donee must
essential to the creation and validity of a
trust may demand comply with the legal
trust. However, such acceptance is
performance of the requirements in
presumed if there is no proof to the
obligation without having accepting donations.
contrary and the trust does not impose any
formally accepted the
onerous condition upon the beneficiary.
benefit of the trust in
public document, upon Requisites for a Trustee to claim title by
mere acquiescence in the prescription:
formation of the trust and 1. He has performed open and unequivocal
acceptance under the acts of repudiation
second paragraph of
article 1311 (stipulations 2. Such positive acts of repudiation have
pour autrui). been made known to the beneficiary or the
cestui que trust
3. The evidence thereon should be clear and
TRUST PROPERTY convincing and
The trustee is not a mere agent but an owner. 4. The period fixed by law has expired (10
But his ownership is a mere matter of form years from the time that the repudiation is
rather than substance, and nominal rather made known to the beneficiary in cases of
than real. express trust or resulting trust while 10
years from the time a constructive trust
The trust property is owned by two or more arises).
persons at the same time, the relation
between the two owners being such that ! The existence of express trusts
one of them is under an obligation to use concerning real property may not be
his ownership for the benefit of the other. established by parol evidence (Art. 1443). It
must be proven by some writing or deed.
194 MEMORY AID IN CIVIL LAW
Partnership

Bare allegations do not constitute IMPLIED TRUST

evidence adequate to support a
Are those, without being express, are
conclusion. They are not equivalent to
deducible from the nature of the transaction as
proof under the Rules of Court (Filipinas Port
matters of intention, or which are superinduced
Services, Inc. v. Go. GR No. 161886. March 16,
on the transaction by operation of law, as
2007).
matters of equity independently of the
! While implied trusts may be proved by oral particular intention of the parties.
evidence, the evidence must be
Kinds of Implied Trusts
trustworthy and received by the courts with
extreme caution, and should not be made 1. Purchase money resulting trust (Art. 1448)
to rest on loose, equivocal or indefinite There is a resulting trust when property
declarations. The proof should be as fully is sold, and the legal estate is granted to
convincing as if the acts giving rise to the one party but the price is paid by another
trust obligation are proven by an authentic party for the purpose of having the
document (Filipinas Port Services Inc. v. Go. GR beneficial interest of the property.
No. 161886. March 16, 2007).
To give rise to a purchase money
resulting trust, it is essential that there be:
EXPRESS TRUST AND IMPLIED TRUST DISTINGUISHED a. an actual payment of money,
property or services or an
EXPRESS TRUST IMPLIED TRUST
equivalent, constituting valuable
(CPR) consideration;
1. As to creation b. such consideration must be
Created by the intention Come into being by furnished by the alleged
of the parties operation of law. beneficiary of a resulting trust.
2. As to proof of trust EXCEPTIONS:
An express trust over an An implied trust over i. Where A pays the purchase money
immovable property or an immovable or any and title is conveyed by absolute
any interest therein interest therein may deed to A’s child or to a person to
cannot be proved by be proved by oral whom A stands in loco parentis
parol evidence evidence. and who makes no express
3. As regards repudiation of trust promise, a trust does not result,
the presumption being that a gift
An express repudiation In constructive trusts, was intended;
made known to the even if there is no
beneficiary is necessary repudiation, laches ii. Where an actual contrary intention
in order that laches or may bar an action to is proved;
acquisitive prescription enforce an implied ! Where the purchase is made in
may bar an action to trust. violation of an existing statute and in
enforce an express trust. evasion of its express provision, no
trust can result in favor of the party
NOTES: The 10-year prescriptive period in case
who is guilty of fraud (Tigno vs. Court of
of implied trust begins to run from the date the
Appeals. GR No. 110115October 8, 1997).
trustee repudiates the express trust. In the case
of Sps. Pascual, et al. v. CA, et al. GR No. 2. Donations made to a person but the
115925, August 15, 2003, it was held that beneficial interest is vested in another.
repudiation takes place when the adverse party The donee is the trustee while the
registers the land. designated third person is the beneficiary
(Art. 1449).
The 4-year prescriptive period under Art. 1391
applies only if the fraud does not give rise to an 3. Purchase with borrowed funds and the
implied trust, and the action is to annul a voidable conveyance is made to lender to secure
contract under Art. 1390. payment of debt (Art. 1450).
4. Legal title to land inherited by heir placed
TRUST PURSUIT RULE in the name of another (Art. 1451).

Equity will pursue property that is wrongfully 5.
converted by the fiduciary, or otherwise compel
restitution to the beneficiary. A trust will follow the 6.
property through all changes in its state and form,
provided its product or proceeds are capable of
identification. 7.
Legal title to property purchased taken in
one co-owner (Art. 1452).
Conveyance under a promise to hold for,
or transfer to another (Art. 1453).
Absolute conveyance to a person to
s e c u r e p e r f o r m a n c e o f g r a n t o r ’s
obligation (Art. 1454).
San Beda College of Law 195
2008 CENTRALIZED BAR OPERATIONS

8. Purchase of property with use of trust 3. One arising from the agent’s willful
funds (Art. 1455). violation of the trust reposed in him by the
principal by buying for himself the property
9. Acquisition of property through mistake or
he was supposed to buy for the principal
fraud (Art. 1456).
who designated and appointed him to
NOTE: An action for reconveyance of a parcel negotiate with the owner.
of land based on an implied or constructive
4. In consonance with the trust fund doctrine
trust prescribes in ten years, the point of
in Corporation Law, the assets of the
reference being the date of registration of the
corporation, as represented by the capital
deed or the date of the issuance of the
stock, are regarded as “trust fund” to be
certificate of title over the property. BUT, this
maintained unimpaired for the payment of
rule applies only when the plaintiff (or person
corporate creditors.
enforcing the trust) is not in possession of the
property, since if a person claiming to be the
owner thereof is in actual possession of the RESULTING AND CONSTRUCTIVE TRUST
property, the right to seek reconveyance, DISTINGUISHED
which in effect seeks to quiet title to property,
does not prescribe. CONSTRUCTIVE
RESULTING TRUST
Requisites before period or prescription may TRUST
start in regard to an action based on an 1. Intention to create trust:
implied trust: The intent of the The trust is created
a. The trustee has performed unequivocal parties to create a trust irrespective of or even
acts of repudiation amounting to an ouster is presumed or implied contrary to the intention
of the cestui que trust. by law from the nature of the parties to promote
of their transaction justice, frustrate fraud
b. Such positive acts of repudiation have
and to prevent unjust
been made know to the cestui que trust;
enrichment.
and
2. Prescriptive period:
c. Evidence thereon is clear and positive
(Vda. De Cabrera v. Court of Appeals. GR No. The 10 year The 10 year prescriptive
108547. February 3, 1997). prescriptive period period shall be counted
shall be counted from from the time that the
NOTE: The enumeration is not exclusive. the time repudiation is constructive trust arises.
Other Examples of Implied Trust: made known to
beneficiary.
1. The registration of land under torrens in
the name of one person do not bar 3. Examples:
evidence to show it was only held in trust Illustrated in Articles Illustrated in Articles
for another. 1448, 1449, 1451, 1450, 1454, 1455, 1456
2. Certificate of registration of vehicle placed 1452, 1453
in the name of a person although the price
was not paid by him but by another.

! END OF PARTNERSHIP "

196 MEMORY AID IN CIVIL LAW
Credit Transactions

CIVIL LAW
CREDIT TRANSACTIONS
CREDIT TRANSACTIONS
CREDIT TRANSACTIONS BAILMENT
All transactions involving the purchase or loan of The delivery of property of one person to
goods, services, or money with a promise to pay another in trust for a specific purpose, with a
or deliver in the future contract, express or implied, that the trust shall
be faithfully executed and the property
returned or duly accounted for when the
CONTRACTS OF SECURITY special purpose is accomplished or kept until
Types: the bailor claims it.

1. Secured transactions/contracts of real Parties:

security – transactions supported by a
collateral or an encumbrance of property
2. Unsecured transactions/contracts of personal
security – transactions supported only by a
promise, or commitment of another such as a
guarantor or surety
1. bailor – one who delivers the possession
or custody of the thing bailed
2. bailee – one who receives the custody or
possession of the thing thus delivered

SECURITY
Something given, deposited, or serving as a
means to ensure enforcement of an obligation
or of protecting some interest in property
Types of Security
1. personal – when an individual becomes
surety or guarantor
2. real or property – when an encumbrance
is made on property.

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
San Beda College of Law 197
2008 CENTRALIZED BAR OPERATIONS

Loan (Art. 1933-1961)

Loan
a contract wherein one of the parties delivers to 2. Precarium – one whereby the bailor may
another, either something not consumable so that demand the thing loaned at will; if any of
the latter may use the same for a certain time and the following exist:
return it or money or other consumable thing,
a. duration and purpose of the contract
upon the condition that the same amount of the
is not stipulated
same kind and quality shall be paid.
b. use of the thing is merely tolerated
by the owner
Characteristics:
2. Simple loan (mutuum) – lender delivers to
1. Real Contract – delivery of the thing the borrower money or other consumable
loaned is necessary for the perfection of thing upon the condition that the latter shall
the contract return the same amount of the same kind
and quality.
Reason: delivery is necessary in view of
the purpose of the contract which is to
transfer either the use or the ownership of
COMMODATUM AND MUTUUM DISTINGUISHED
the thing loaned.
NOTE: An accepted promise to make a Commodatum Mutuum
future loan is a consensual contract, and (COPS-LOTR)
therefore binding upon the parties but it is 1. Object
only after delivery of the subject matter,
will the real contract of loan arise (Art Non-consumable Consumable
1934). Exception: Article Correlate with Article 418
1936
Effect of non-delivery: does not
constitute the real contract of loan but a 2. Cause
mere consensual contract of loan (Bonnevie v. Gratuitous Gratuitous or not
CA. GR. No. L-4910. October 24, 1983). 3. Purpose
2. Unilateral Contract – once the subject Use or temporary Consumption
matter has been delivered, it creates possession
obligations on the part of only one of the
parties (i.e. borrower). 4. Subject Matter

Cause or Consideration: Any property personal property

1. as to borrower – the acquisition of the 5. Ownership of the thing

thing Retained by bailor Passes to the debtor
2. as to lender – the right to demand its 6. Thing to be returned
return or its equivalent Exact thing loaned Equal amount of the
Kinds: same kind and quality
1. Commodatum – when the bailor delivers to 7. Who bears risk of loss
the bailee a non-consumable thing so that the Bailor Debtor /bailee
latter may use it for a certain time and return
8. When to return
the identical thing.
In case of urgent need Upon expiration of the
Kinds of Commodatum:
and commission of term only
1. Ordinary Commodatum – use by the any acts of ingratitude,
bailee of the thing is for a certain period even before the
of time expiration of the term
198 MEMORY AID IN CIVIL LAW
Credit Transactions

LOAN AND CREDIT DISTINGUISHED the amount fixed in the “credit” (People v. Concepcion.
GR No. L-18535. August 15, 1922).
Loan Credit
Delivery by one party and Ability of a person to
the receipt of other party of borrow money or LOAN AND DISCOUNTING OF PAPER DISTINGUISHED
a given sum of money or things by virtue of
other consumable thing the trust or Loan Discounting of Paper
upon an agreement, confidence reposed 1. Interest taken at the Interest is taken in
express or implied, to repay by the lender that expiration of the credit advance
the same amount of the he will pay what he 2. Always on a double Always on a single
same kind and quality, with promised within a name paper (one on name paper (one on
or without interest. specified period. which 2 signatures which no other
NOTE: The concession of “credit” necessarily appear with both indorsement, other than
involves the granting of “loans” up to the limit of parties liable for the signature of the
payment) maker appears)

Commodatum (Arts. 1935–1952)

Purpose: Bailee acquires the temporary use of • A bailee can neither lease or loan the
the thing but not its fruits because the bailor object of the contract to a third person
remains the owner (unless use of the fruits is
$ Exception: use of the thing loaned
stipulated or enjoyment of the fruits is
may extend to members of the bailee’s
incidental to its use) (Art. 1935).
household except if:
• If the bailee is not entitled to the use of a. there is a contrary stipulation or
the thing, the contract is deposit.
b. nature of the thing forbids such use.
Cause: Essentially gratuitous; if any
compensation is to be paid by the borrower
there arises a lease contract. OBLIGATIONS OF THE BAILEE
• The presumption is that the bailor has (Arts. 1941 – 1945):
loaned the thing for having no need
Principal Obligations:
therefor.
1. take care of the thing with diligence of a
Subject Matter: Generally, non-consumable but
good father of a family (Arts. 1163, 1169,1170
consumable goods may be the subject matter
and 1173)
of commodatum if the purpose of the contract
is not the consumption of the object (Art. 1936) 2. return the thing upon expiration of terms or
upon accomplishment of purpose (Art.
• Movable or immovable property (Art. 1937)
1933)
Bailor Need NOT be the Owner of the Thing
Other obligations:
Loaned (Art. 1938)
1. Pay for the ordinary expenses for the use
• It is sufficient that the bailor has a a)
and preservation of the thing loaned (Art.
possessory interest or b) the right to use
1941)
which he may assert against the bailee or
3rd persons but not the rightful owner. 2. To be liable for loss even if it should be
through a fortuitous event in the following
• A mere lessee or usufructuary may lend
cases $ this is an exception to the
but the borrower or bailee himself may
general rule that the bailee is not liable for
not lend nor lease the thing loaned to him
loss or damage due to a fortuitous event
to a third person (Art. 1932[2]).
because ownership remain with the bailor:
Purely Personal: (KLAS-D)
• Intransmissible right (this is deemed an a. when he keeps it longer than the
exception to Art. 1178) period stipulated, or after the
accomplishment of its use;
• Death of either party terminates the
contract unless by stipulation, the b. when he lends or leases it to third
commodatum is transmitted to the heirs persons who are not members of his
of either or both parties. household;
c. when the thing loaned has been
delivered with appraisal of its value
unless there is a stipulation exempting
San Beda College of Law
the bailee from responsibility in case
of fortuitous event;
d. when, being able to save either of the
thing borrowed or his own things, he
chose to save the latter; or
e. when the bailee devoted the thing for
a different use from that agreed upon
(Art. 1942).
3. To be liable for the deterioration of thing
loaned:
a. if expressly stipulated;
b. if guilty of fault or negligence; or
c. if he devotes the thing to any purpose
different from that for which it has
been loaned
4. Pay for extraordinary expenses arising
from the actual use of the thing, which
shall be borne by both the bailor and the
bailee, even though the bailee acted
without fault, unless there is a stipulation
to the contrary (Art. 1949 par 2)
5. To return the thing loaned
The bailee has no right to retain the thing
loaned as security for claims he has
against the bailor even for
extraordinary expenses except for a
claim for damages suffered by the
bailee because of hidden flaws known
to the bailor
The right of retention ceases when the
bailee is reimbursed
The bailee cannot lawfully sell the thing to
satisfy the damages
6. To pay for the expenses other than those
under Arts. 1941 and 1949 (e.g. ordinary
expenses for the preservation and
expenses for ostentation)
NOTES: In case there are multiple bailees,
their obligation shall be solidary. Reason: to
safeguard effectively the rights of the bailor
OBLIGATIONS OF THE BAILOR :
1. To respect the duration of the loan because
the bailor is bound by the terms of the
Simple Loan or Mutuum (Arts. 1953–1961)
NOTES: Mere issuance of checks does not
perfect the contract of loan. It is only after the
checks have been encashed that the contract may
be deemed perfected.
The destruction of the thing loaned does not
extinguish one’s obligation to pay because his
obligation is not to return the thing loaned but
to pay a generic thing.
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2008 CENTRALIZED BAR OPERATIONS
contract of commodatum which is for a certain
time
EXCEPTIONS:
a. In case of urgent need of the thing, he
may demand its return or temporary use.
Reason: commodatum is essentially
gratuitous;
Effect: contract of commodatum is
suspended while the thing is in the
possession of the bailor
b. If the bailee commits any act of
ingratitude specified in Art. 765.
Reason: similarity of commodatum with
donation
2. Refund to the bailee extraordinary expenses
for the preservation of the thing, provided the
bailee brings the same to the knowledge of
the bailor before incurring them, except when
the reply to the notification cannot be awaited
without danger.
3. To be liable to the bailee for damages for
known hidden flaws.
Requisites: (FHANS)
1. Existence of flaw or defect;
2. The flaw or defect is hidden;
3. The bailor is aware thereof;
4. bailee is not aware thereof;
5. The bailee suffers damages by reason
of said flaw or defect.
NOTES: If the above requisites concur, the
bailee has the right of retention for
damages.
The bailor cannot exempt himself from
the payment of expenses or damages by
abandoning the thing to the bailee.
Reason: the expenses or damages may
exceed the value of the thing loaned
Right of Retention (Art. 1944)
• only for damages for known hidden
flaws under Art. 1951
• no right to sell
No estafa is committed by a person who refuses
to pay his debt or denies its existence.
Reason: the borrower effectively acquires
ownership
200 MEMORY AID IN CIVIL LAW
Credit Transactions

MUTUUM AND RENT DISTINGUISHED Definition of Fungible and Non-Fungible:

Mutuum Rent 1. fungible – those which belong to common

genus which includes several species of
1. Delivery of money or Delivery of some non- the same kind (e.g. grain, wine, oil)
some consumable thing consumable thing in
with a promise to repay order that the other may 2. non-fungible – those that are specifically
an equivalent of the use it during a certain determined and cannot be substituted by
same kind and quality period and return it to others (e.g. specific land, building,
the former particular house)
2. There is a transfer of There is no transfer of
ownership of the thing ownership of the thing COMMODATUM / MUTUUM AND BARTER
delivered. delivered. DISTINGUISHED
3. Relationship bet- Relationship is that of a
ween the parties is that landlord and tenant Commodatum/ Mutuum Barter
of obligor-obligee Subject matter is money or Subject matter is
4. Creditor receives Landlord receives fungible things non-fungible, (non
payment for his loan. compensation either in consumable) things
money, provisions, In commodatum, the The thing with
chattels, or labor. bailee is bound to return equivalent value is
the identical thing given in return for
LOAN AND SALE DISTINGUISHED borrowed what has been
received
Loan Sale
Mutuum may be gratuitous Onerous, actually a
1. Real contract Consensual contract
and commodatum is mutual sale
2. Generally unilateral Bilateral and reciprocal always gratuitous
because only borrower
has obligations
Form of Payment:
NOTE: If the property is “sold”, but the real intent
is only to give the object as security for a debt – 1. If thing loaned is money – payment must
as when the “price” is comparatively small – there be made in the currency stipulated,
really is a contract of loan with an “equitable otherwise that which is legal tender in the
mortgage” (Art. 1602). Philippines and in case of extraordinary
inflation or deflation, payment shall be in
the value of the currency at the time of the
B ARTER – a contract whereby one person creation of the obligation.
transfers ownership of non–fungible things to 2. If thing loaned is other than money –
another with the obligation on the part of the payment of another thing of the same kind,
latter to give things of the same kind, quality quality and quantity. In case it is
and quantity (Art. 1954). impossible to do so, the borrower shall pay
its value at the time of the perfection of the
loan.

Interest
Interest
Requisites for Demandability: (ELI) Compound Interest
1. must be expressly stipulated GENERAL RULE: Unpaid interest shall not
earn interest.
EXCEPTIONS:
EXCEPTIONS:
a. indemnity for damages
a. when judicially demanded
b. interest accruing from unpaid interest
b. when there is an express stipulation
2. must be lawful
(must be in writing)
3. the agreement must be in writing
San Beda College of Law 201
2008 CENTRALIZED BAR OPERATIONS

Guidelines for the Application of Proper they may be demanded separately (Sentinel
Interest Rates Insurance v. CA, G.R. No. L-52482 February 23,
1990).
THE RULES FOR THE IMPOSITION OF INTEREST
RATES: Validity of Unconscionable Interest Rate in a
Loan
a) Stipulated rate shall apply.
The Supreme Court said that nothing in said
b) When an obligation, regardless of its
circular suspending the Usury Law grants
source, is breached, the contravenor can
lenders authority to raise interest rates to
be held liable for damages.
levels which will either enslave their
c) With regard to an award of interest in the borrowers or lead to a hemorrhaging of
concept of damages, the rate of interest, their assets (Almeda v. CA. GR No. 113412.
as well as the accrual thereof, is imposed, April 17, 1996).
as follows:
In Medel v. Court of Appeals, (GR No. 131622.
i. When the obligation breached November 27, 1998) it was ruled that while
consists of payment of a sum of stipulated interest of 5.5% per month on a
money, in the absence of an loan is usurious pursuant to CBC No. 905,
agreement, the rate shall be the legal the same must be equitably reduced for
rate computed from default. being iniquitous, unconscionable and
NOTE: The interest due shall itself exorbitant. It is contrary to morals. It was
earn legal interest from the time it is reduced to 12% per annum in consonant
judicially demanded. with justice and fair play.
ii. In other cases, the rate of interest When the agreed rate is iniquitous and
shall be six percent (6%) per annum. unconscionable, the courts may reduce the
same as reason and equity demand.
NOTE: No interest shall be adjudged (Imperial v. Jaucian. G.R. No. 149004 April 14,
on unliquidated claims or damages 2004).
except when or until the demand can
be established with reasonable Recovery of Unstipulated Interest Paid
certainty. When the demand cannot III. Paid by mistake – the debtor may recover
be established, the interest shall as in the case of solutio indebiti or undue
begin to run only from the date of the payment
judgment of the court is made.
IV. Voluntarily paid – no recovery as in the
iii. When the judgment of the court case of natural obligations
awarding a sum of money becomes
final and executory, the rate of legal
interest, shall be 12% per annum
from such finality until its satisfaction,
this interim period being deemed to
be by then an equivalent to a
forbearance of credit (Eastern Shipping
Lines v. CA. GR No. 97412. July 12, 1994).
NOTES: Central Bank Circular No. 416 fixing
the rate of interest at 12% per annum deals
with loans, forbearance of any money, goods
or credits and judgments involving such loans,
or forbearance in the absence of express
agreement to such rate
Central Bank Circular No. 905 (Dec. 10,
1982) suspended the Usury Law.
If the obligation arises from other sources such
as contract of sale, damages arising from
injury to persons and loss of property, and
actions arising from unpaid insurance
claims, what is applicable is the rate of 6%
annually as provided in Art. 2209 (Terminal
Facilties and Services Corp. v. PPA. GR No. 135639.
February 27, 2002).
Interest as indemnity for damages is payable
only in case of default or non-performance
of the contract. As they are distinct claims,
202 MEMORY AID IN CIVIL LAW
Credit Transactions

Deposit (Arts. 1962-2009)

Deposit
A contract constituted from the moment a person DEPOSIT AND COMMODATUM DISTINGUISHED
receives a thing belonging to another, with the
obligation of safely keeping it and of returning the Deposit Commodatum
same. Purpose is Safekeeping Purpose is the transfer of
the use
• Principal purpose: SAFEKEEPING. If the
safekeeping is not the principle purpose it May be gratuitous Essentially and always
may be either a) commodatum, b) lease or gratuitous
c) agency Movable/corporeal things Both movable and
only in case of immovable may be the
• The depositor need not be the owner of extrajudicial deposit object.
the thing deposited because the purpose
of the contract is safekeeping and not
transfer of ownership.
Kinds of Deposit:
• A contract of deposit may be made orally
1. Judicial (Sequestration) – takes place
or in writing (Art. 1969).
when an attachment or seizure of property
Characteristics: in litigation is ordered.
1. Real Contract – perfected by the delivery 2. Extra-judicial
of the subject matter
a. Voluntary – delivery is made by the
2. Unilateral – when gratuitous because only will of the depositor or by two or more
the depositary has an obligation persons each of whom believes
himself entitled to the thing deposited.
Bilateral – if with compensation because it
(Arts. 1968–1995)
gives rise to obligations on the part of both
the depositary and depositor b. Necessary – made in compliance with
(1) a legal obligation, or (2) on
occasion of any calamity, or (3) by
DEPOSIT AND MUTUUM DISTINGUISHED travelers in hotels and inns or (4) by
travelers with common carriers.
Deposit Mutuum
NOTE: Another difference between a
1. Purpose voluntary deposit and a necessary deposit
For safekeeping or custody Consumption is that in the former, the depositor is free in
choosing the depositary, in the latter, there
2. When to Return
is lack of free choice in the depositor.
Depositor can demand return Period must be
anytime respected by the Extra-judicial deposit does not include
lender incorporeal/intangible property such as
right and actions for it follows the person
3. Subject Matter of the owner
Any property Fungible things
4. Relationship JUDICIAL AND EXTRA-JUDICIAL DEPOSIT
Depositor and depositary Lender and DISTINGUISHED
borrower
Judicial Extra-judicial
5. Compensation
1. Creation
Generally gratuitous (except There can be
Will of the court Will of the parties or
by mutual agreement). compensation. contract
2. Purpose
Insures the right of a party to Custody and
property or to recover in safekeeping
case of favorable judgment
San Beda College of Law
Judicial Extra-judicial
3. Subject Matter
Generally immovables Movables only
4. Cause
Always onerous Generally gratuitous
5. When must the thing be returned
Upon order of the court or Upon demand of
when litigation is ended depositor
6. In whose behalf it is held
Person who has a right Depositor or third
person designated
Deposit is NOT Gratuitous in the following:
1. when there is a stipulation
2. depositary is engaged in business of
storing goods
3. property saved from destruction without
knowledge of the owner
OBLIGATIONS OF THE DEPOSITARY:
1. To keep the thing safely (Art. 1972)
RULES:
$ He is liable if the loss occurs through his
fault or negligence even if the thing is
insured
$ The loss of the thing while in his
possession, ordinarily raises the
presumption of fault in his part.
$ The required degree of care is greater if
the deposit is for compensation.
2. To return the thing (Art. 1972)
PERSON TO W H O M T H E T H I N G M U S T B E
RETURNED:
a. D e p o s i t o r, t o h i s h e i r s a n d
successors, or the person who may
have been designated in the contract
b. If the depositary is capacitated – he is
subject to all the obligations of a
depositary whether or not the
depositor is capacitated. If the
depositor is incapacitated, the
depositary must return the property to
the legal representative of the
incapacitated or to the depositor
himself if he should acquire capacity
(Art. 1970).
c. If the depositor is capacitated and the
depositary is incapacitated – the latter
does not incur the obligation of a
depositary but he is liable:
i. to return the thing deposited while
still in his possession;
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2008 CENTRALIZED BAR OPERATIONS
ii. to pay the depositor the amount
which he may have benefited
himself with the thing or its price.
If a third person has acquired the
thing in bad faith, the depositor
may bring an action against for its
recovery.
d. If two or more persons each claiming
to be entitled to a thing, the depositary
can file an action to compel the
depositors to settle their conflicting
claims among themselves in the
nature of interpleader (Sec. 1, Rule 62,
Rules of Court).
TIME OF RETURN:
a. General Rule: Upon demand even
though a specified period or time for
such return may have been fixed.
Exception: when the thing is judicially
attached while in the depositary’s
possession or should he have been
notified of the opposition of a third
person to the return or removal of the
thing deposited (Art. 1988).
b. If deposit gratuitous, the depositary
may return the thing deposited
notwithstanding that a period has
been fixed for the deposit if justifiable
reasons exists for its return. If the
depositor refuses to receive it, the
depositary may secure its
consignation from the court.
c. If the deposit is for a valuable
consideration, period must be followed
e v e n i f t h e d e p o s i t a r y s u ff e r s
inconvenience as a consequence (Art
1989).
WHAT TO RETURN:
a. product, accessories, and accessions
of the thing deposited (Art. 1983)
b. If by force majeure or government
order, the depositary loses the thing,
and receives money or another thing
in its place, he shall deliver the sum or
other thing to the depositor.
WHERE TO RETURN:
a. place agreed upon by the parties, or
b. at the place where the thing deposited
might be even provided there was no
malice on the part of depositary
3. Not to deposit the thing with a third person
unless authorized by express stipulation
(Art. 1973). Reason: deposit is founded on
trust and confidence
The depositor is liable for the loss under the
following:
a. He transfers the deposit with a third
person without authority;
204 MEMORY AID IN CIVIL LAW
Credit Transactions

b. He deposits the thing with a third person Effect if permission to use is given:
who is manifestly careless or unfit,
a. Thing deposited is non-consumable,
although authorized, even in the absence
the contract is a commodatum, unless
of negligence; or
safe-keeping is still the principal
c. The thing is lost through the negligence of purpose.
his employees whether the latter are
b. Thing deposited consists of
manifestly careless or not.
consumable things, the contract is
4. To change the way of the deposit if under converted into a simple loan or
the circumstances, the depositary may mutuum unless safekeeping is still the
reasonably presume that the depositor would principal purpose in which case it is
consent to the change if he knew of the facts called an irregular deposit (Example:
of the situation, provided, that the former bank deposits).
notifies the depositor thereof and wait for his
IRREGULAR DEPOSIT AND MUTUUM
decision, unless delay would cause danger
DISTINGUISHED
(Art. 1974).
5. If the thing deposited should earn interest Irregular deposit Mutuum
(Art. 1975): The consumable The lender cannot
a. to collect interest and the capital itself as thing deposited may demand restitution until
it fall due be demanded at will the time for payment,
by the depositor. as provided in the
b. to take steps to preserve its value and contract, has arisen.
rights with regard to it
The only benefit is Essential cause for the
c. the depositary is bound to collect also the that which accrues transaction is the
capital when it falls due to the depositor. necessity of the
NOTE: A contract for the rent of safety borrower.
deposit boxes is a special kind of deposit; The irregular Common creditors
hence, it is not to be strictly governed by the depositor has a enjoy no preference in
provisions on deposit. The relation between a preference over the distribution of the
bank and its customer is that of a bailor and other creditors with debtor’s property.
bailee, the bailment being for hire and mutual respect to the thing
benefit. deposited.
It cannot be characterized as an ordinary 8. To be liable for loss through fortuitous
contract of lease because full and absolute event (Art. 1979): (SUDA)
control of the safety deposit boxes was not
given to the joint renters (CA Agro v. CA. GR No. a. if stipulated
90027. March 3, 1993). b. if he uses the thing without the
6. Not to commingle things deposited if so depositor's permission
stipulated (Art. 1976) c. if he delays its return
depositary can only commingle if the articles d. if he allows others to use it
are of the same kind and quality
9. When the thing deposited is delivered
if commingling is allowed, each depositor sealed and closed :
shall be entitled to each portion of the
entire mass as the amount deposited by a. to return the thing deposited in the same
him bears to the whole condition

7. Not to make use of the thing deposited b. to pay for damages should the seal or
unless authorized (Art. 1977) lock be broken through his fault, which is
presumed unless proven otherwise
GENERAL RULE: Deposit is not for use of the
thing. Use by the depositary would make c. to keep the secret of the deposit when the
him liable for damages. seal or lock is broken with or without his
fault
EXCEPTIONS:
NOTE: The depositary is authorized to open
1. When the preservation of the thing the thing deposited which is closed and
deposited requires its use sealed when (Art. 1982):
2. When authorized by the depositor (the 1. there is presumed authority
authorization shall not be presumed
and its existence must be proved) 2. there is necessity to do so
San Beda College of Law
10. To pay interest on sums converted to
personal use if the deposit consists of
money (Art. 1983)
NOTES: Fixed, savings, and current deposits
of money in banks and similar institutions
shall be governed by the provisions
concerning simple loan (Art. 1980).
A bank can compensate or set off the
deposit in its hands for the payment of any
indebtedness to it on the part of the depositor.
In true deposit, such is not allowed.
10. To advise the true owner that a deposit
has been made should he discover that
the thing deposited was stolen from the
owner (Art. 1984)
If the owner despite such information does not
claim it within the period of 1 month, the
depositary shall be relieved of all
responsibility by returning the same to the
depositor
Rule when there are Two or More Depositors:
1. Thing deposited is divisible and depositors
are not solidary: Each depositor can demand
only his proportionate share thereto.
2. Obligation is solidary or if thing is not divisible:
Rules on active solidarity shall apply, i.e. each
one of the solidary depositors may do
whatever may be useful to the others but not
anything which may be prejudicial to the latter
(Art. 1212), and the depositary may return the
thing to anyone of the solidary depositors
unless a demand, judicial or extrajudicial, for
its return has been made by one of them in
which case, delivery should be made to him
(Art. 1214).
3. Return to one of depositors stipulated: The
depositary is bound to return it only to the
person designated although he has not made
any demand for its return.
NOTES: The depositary may retain the thing in
pledge until full payment of what may be due him
by reason of the deposit (Art. 1994).
The depositor’s heir who in good faith may
have sold the thing which he did not know was
deposited, shall only be bound to return the price
he may have received or to assign his right of
action against the buyer in case the price has not
been paid him (Art. 1991).
OBLIGATIONS OF THE DEPOSITOR:
1. To pay expenses for preservation
(contemplates ordinary and extraordinary
necessary expenses)
a. If the deposit is gratuitous, the
depositor is obliged to reimburse the
depositary for expenses incurred for
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2008 CENTRALIZED BAR OPERATIONS
the preservation of the thing deposited
(Art. 1992)
b. If the deposit is for valuable
consideration, expenses for
preservation are borne by the
depositary unless there is a contrary
stipulation
2. To pay loses incurred by the depositary
due to the character of the thing deposited
GENERAL RULE: The depositor shall reimburse
the depositary for any loss arising from the
character of the thing deposited.
EXCEPTIONS:
a. At the time of the deposit, the depositor
was not aware of the dangerous character
of the thing.
b. when depositor was not expected to know
the dangerous character of the thing
c. when the depositor notified the depository
of the same
d. The depositary was aware of it without
advice from the depositor.
Extinguishment of Voluntary Deposit
1. Loss or destruction of the thing deposited
2. In case of gratuitous deposit, upon the
death of either the depositor or the
depositary (because a gratuitous deposit
is a personal contract)
3. Other causes, such as return of the thing,
novation, merger, expiration of the term
fulfillment of the resolutory condition, etc.
(Art. 1231).
NECESSARY DEPOSITS
1. Made in compliance with a legal obligation
2. Made on the occasion of any calamity
such as fire, storm, flood, pillage,
shipwreck or other similar events (deposito
miserable)
3. Made by travelers in hotels and inns
4. Made by travelers with common carriers
Deposit by Travelers in Hotels and Inns:
The keepers of hotels or inns shall be
responsible as depositaries for the deposit of
effects made by travelers provided:
a. Notice was given to them or to their
employees of the effects brought by the
guest; and
b. The guests take the precautions which
said hotel-keepers or their substitutes
advised relative to the care and vigilance
of their effects.
• This also applies to deposits made to
common carriers (Art. 1754)
206
Credit Transactions
NOTES: Liability extends to vehicles, animals
and articles which have been introduced or
placed in the annexes of the hotel.
Liability shall EXCLUDE losses which proceed
from force majeure. The act of a thief or
robber is not deemed force majeure unless
done with the use of arms or irresistible
force.
Guaranty (Arts. 2047-2084)
Guaranty
A contract whereby a person (guarantor) binds
himself to the creditor to fulfill the obligation of the
principal debtor in case the latter fail to do so.
Classification of Guaranty:
A. In the Broad sense:
1. Personal – the guaranty is the credit
given by the guarantor.
2. Real – the guaranty is the property,
movable or immovable.
B. As to its Origin
1. Conventional – agreed upon by the
parties
2. Legal – imposed by virtue of a provision
of a law
3. Judicial – one which is required by a
court to guarantee the eventual right of
one of the parties in a case
C. As to Consideration
1. Gratuitous – the guarantor does not
receive anything for acting as such.
2. Onerous – the guarantor receives
valuable consideration.
D. As to the Person Guaranteed
1. Single – one constituted solely to
guarantee or secure performance by the
debtor of the principal obligation
2. Double or Sub-guaranty – one
constituted to secure the fulfillment by the
guarantor of a prior guaranty
E. As to Scope and Extent
1. Definite – the guaranty is limited to the
principal obligation only, or to a specific
portion thereof.
2. Indefinite or Simple – one which not
only includes the principal obligation but
MEMORY AID IN CIVIL LAW
The hotel-keeper cannot free himself from the
responsibility by posting notices to the
effect that he is not liable for the articles
brought by the guest. Any stipulation to
such effect shall be void.
Notice is necessary only for suing civil liability
but not in criminal liability.
also all its accessories including judicial
costs
SURETYSHIP
A contract whereby one person engages to be
answerable for the debt, default or miscarriage
of the principal
NOTES: The reference in Art. 2047 to solidary
obligations does not mean that suretyship is
withdrawn from the applicable provisions
governing guaranty. A surety is almost the
same as a solidary debtor, except that he
himself is a principal debtor.
Nature of Surety’s Undertaking:
1. Liability is contractual and accessory but
direct.
NOTE: He directly, primarily and equally
binds himself with the principal as original
promisor, although he possesses no direct
or personal interest over the latter’s
obligation, nor does he receive any
benefits therefrom (PNB v. CA. GR No.
33174. July 4, 1991).
2. Liability is limited by the contract.
3. Liability arises only if principal debtor is
held liable.
NOTES: The creditor may sue separately
or together the principal debtor and any of
the sureties.
In the absence of collusion, the surety
is bound by a judgment against the
principal even though he was not a party
to the proceedings. The nature of its
undertaking makes it privy to all
proceedings against its principal (Finman
General Assurance Corp. v. Salik. GR No. 84084.
August 20, 1990 )
4. Surety is not entitled to the benefit of
exhaustion.
San Beda College of Law
5. Undertaking is to creditor and not to
debtor.
6. Surety is not entitled to notice of principal’s
default.
7. Prior demand by the creditor upon
principal is not required.
NOTE: As soon as the principal is in
default, the surety likewise is in default.
8. Surety is not exonerated by neglect of
creditor to sue principal.
CHARACTERISTICS OF GUARANTY AND
SURETYSHIP:
1. Accessory – It cannot exist by itself and is
indispensable condition for its existence that
there must be a principal valid obligation.
NOTE: Guaranty may be constituted to
guarantee the performance of a voidable or
unenforceable contract. It may also guarantee
a natural obligation (Art. 2052).
2. Subsidiary and Conditional – takes effect
only when the principal debtor fails in his
obligation, subject to limitation
NOTES: The guarantor cannot bind himself
for more than the principal debtor and even if
he does, his liability shall be reduced to the
limits of that of the debtor. But a guarantor
may bind himself for less than that of the
principal (Art. 2054).
A guaranty may be given as security for
future debts, the amount of which is not yet
known; there can be no claim against the
guarantor until the debt is liquidated. A
conditional obligation may also be secured
(Art. 2053).
3. Unilateral – may be entered even w/o the
intervention of the principal debtor, in which
case Arts. 1236 and 1237 shall apply and it
gives rise only to a duty on the part of the
guarantor in relation to the creditor and not
vice versa.
4. Nominate
5. Consensual
6. It is a contract between the guarantor/
surety and creditor.
NOTES:
Acceptance of Guaranty by Creditor and
Notice thereof to Guarantor:
In declaring that guaranty must be express,
the law refers solely and exclusively to the
obligation of the guarantor because it is he
alone who binds himself by his
acceptance. With respect to the creditor,
no such requirement is needed because
he binds himself to nothing.
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2008 CENTRALIZED BAR OPERATIONS
However, when there is merely an offer of a
guaranty, or merely a conditional guaranty,
in the sense that it requires action by the
creditor before the obligation becomes
fixed, it does not become binding until it is
accepted and until notice of such
acceptance by the creditor is given to, or
acquired by, the guarantor, or until he has
notice or knowledge that the creditor has
performed the condition and intends to act
upon the guaranty.
But in any case, the creditor is not precluded
from waiving the requirement of notice.
The consideration of the guaranty is the same
as the consideration of the principal
obligation.
The creditor may proceed against the
guarantor although he has no right of
action against the principal debtor.
If a guaranty is entered into without the
knowledge or consent or against the will of
the principal debtor, Arts. 1236 and 1237
shall apply (Art. 2050).
• Art. 1236 (par. 2) – whoever pays for
another w/o the consent or against the
will of the debtor can only recover only
insofar as the payment was beneficial
to the debtor.
• Art. 1237 – whoever pays on behalf of
the debtor w/o the latter’s knowledge
or against his consent, cannot compel
the creditor to subrogate to him in his
rights
7. Not presumed. It must be expressed and
reduced in writing.
8. Falls under the Statute of Frauds
9. Strictly interpreted against the creditor
and in favor of the guarantor/surety and is
not to be extended beyond its terms or
specified limit (Magdalena Estates, Inc. vs.. Rodriguez,
18 SCRA 967). The rule of strictissimi juris
commonly pertains to an accommodation
surety because the latter acts without motive
of pecuniary gain and hence, should be
protected against unjust pecuniary
impoverishment by imposing on the principal,
duties akin to those of a fiduciary.
NOTE: It does not apply in case of
compensated sureties.
10. Guarantor must not be the principal
debtor.
Exception: However, in a real guaranty, like
pledge and mortgage, a person may
guarantee his own obligation with his personal
or real properties.
208 MEMORY AID IN CIVIL LAW
Credit Transactions

GUARANTY AND SURETYSHIP DISTINGUISHED GUARANTY AND WARRANTY DISTINGUISHED

Guaranty Suretyship Guaranty Warranty

Liability depends on an Surety assumes liability A contract by An undertaking that the title,
independent agreement as regular party to the which a person quality, or quantity of the
to pay the obligation if undertaking. is bound to subject matter of the contract is
primary debtor fails to another for the what it has been represented to
do so. fulfillment of a be, and relates to some
promise or agreement made ordinarily by
Collateral undertaking Surety is an original
engagement of the party who makes the
promisor.
a third party warranty
Guarantor is secondarily Surety is primarily
liable. liable. NOTES: A guaranty is gratuitous, unless there is a
stipulation to the contrary. The cause of the
Guarantor binds himself Surety undertakes to
contract is the same cause which supports the
to pay if the principal pay if the principal
obligation as to the principal debtor.
CANNOT PAY. DOES NOT PAY.
The peculiar nature of a guaranty or surety
agreement is that it is regarded as valid despite
Insurer of solvency of Insurer of the debt
the absence of any direct consideration received
debtor
by the guarantor or surety either from the principal
Guarantor can avail of Surety cannot avail of debtor or from the creditor; a consideration
the benefit of excussion the benefit of moving to the principal alone will suffice.
and division in case excussion and division.
creditor proceeds
against him. DOUBLE OR SUB-GUARANTY
Not bound to take notice Held to know every One constituted to guarantee the obligation of a
of the non-performance default of his principal guarantor
of his principal • In case of insolvency of the guarantor for
whom he bound himself, is responsible to the
Often discharged by the Not discharged by
co-guarantors in the same terms as the
mere indulgence of the mere indulgence of the
guarantor (Art. 2075).
creditor or want of notice creditor or by want of
of default notice of default
INDORSEMENT AND GUARANTY DISTINGUISHED CONTINUING GUARANTY OR SURETYSHIP
Not limited to a single transaction but
Indorsement Guaranty contemplates a future course of dealings, covering
Primarily of transfer Contract of security a series of transactions generally for an indefinite
time or until revoked
Unless the note is Failure in either or both
promptly presented for of these particulars does NOTES: Exception to the concept of continuing
payment at maturity not generally work as an guaranty is chattel mortgage. A chattel mortgage
and due notice of absolute discharge of a can only cover obligations existing at the time the
dishonor given to the guarantor’s liability, but mortgage is constituted and not those contracted
indorser within a his is discharged only to subsequent to the execution thereof (The Belgian
reasonable time he will the extent of the loss Catholic Missionaries, Inc. v. Magallanes Press. Inc. 49 Phil
be discharged which he may have 647). An exception to this is in case of stocks in
absolutely from all suffered in consequence department stores, drug stores, etc. (Torres v. Limjap.
liability thereon. thereof GR No. 34385. September 21, 1931).
Indorser does not Guarantor warrants the
warrant the solvency. solvency of the promisor
He is answerable on a Extent of Guarantor’s Liability (Art. 2055):
strict compliance with • Where the guaranty definite: It is limited in
the law by the holder, whole or in part to the principal debt, to the
whether the promisor exclusion of accessories.
is solvent or not
• Where guaranty indefinite or simple: It
Indorser can be sued Guarantor cannot be shall comprise not only the principal
as promisor sued as promisor obligation, but also all its accessories,
including the judicial costs, provided with
respect to the latter, that the guarantor
shall only be liable for those costs incurred
after he has been judicially required to
pay.
San Beda College of Law
Qualifications of a Guarantor (Arts. 2056-2057):
1. possesses integrity
2. capacity to bind himself
3. has sufficient property to answer for the
obligation which he guarantees
NOTES:
General Rule: The qualifications need only be
present at the time of the perfection of the
contract.
Exception: when the guarantor is selected
by the principal debtor because the latter
answers for the solvency of the former. In
this case the guarantor must possess the
qualifications prescribed not only at the
moment the guaranty is given but also until
the extinguishment of the debt.
Reason: remember that a guaranty is for
the benefit of the creditor not the debtor
Effect of subsequent loss of required
qualifications: The subsequent loss of the
integrity or property or supervening
incapacity of the guarantor would not
operate to exonerate the guarantor or the
eventual liability he has contracted, and the
contract of guaranty continues.
However, the creditor may demand another
guarantor with the proper qualifications. But
he may waive it if he chooses and hold the
guarantor to his bargain.
BENEFIT OF EXCUSSION (Art. 2058)
Right in which the guarantor cannot be
compelled to pay the creditor unless the latter
has exhausted all the properties of the
principal debtor, and has resorted to all of the
legal remedies against such debtor.
How is it exercised:
1) demand for payment upon the guarantor
only after judgment upon the debt;
2) point out the available property (not in
litigation or encumbered) of the debtor
within the Phil.
• Effect of failure of the creditor to exhaust
and resort to all legal remedies: he shall
suffer the loss but only to the extent of the
value of the said property for the insolvency of
the debtor
NOTE: Not applicable to a contract of suretyship
(Arts. 2047, par. 2; 2059[2])
Cannot even begin to take place before judgment
has been obtained against the debtor (Baylon v.
CA. GR No. 109941.August 17, 1999).
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2008 CENTRALIZED BAR OPERATIONS
When Guarantor is NOT Entitled to the Benefit
of Excussion: (PAIRS-BIPS)
1. If it may be presumed that an execution on
the property of the principal debtor would
not result in the satisfaction of the
obligation
Not necessary that the debtor be
judicially declared insolvent or bankrupt
2. When he has absconded, or cannot be
sued within the Philippines unless he has
left a manager or representative
3. In case of insolvency of the debtor
Must be actual; proven by unsatisfied
writ of execution
4. The guarantor has expressly renounced it
5. If he has bound himself solidarily with the
debtor
6. If he is a judicial bondsman or sub-surety
7. If he fails to interpose it as a defense
before judgment is rendered against him
8. If the guarantor does not set up the benefit
against the creditor upon the latter’s
demand for payment from him.
Demand can be made only after judgment
on the debt
Demand must be actual; joining the
guarantor in the suit against the
principal debtor is not the demand
intended by law
9. Where the pledge or mortgage has been
given by him as special security
BENEFIT OF DIVISION (Art. 2065)
Should there be several guarantors of only one
debtor and for the same debt, the obligation to
answer for the same is divided among all.
Liability: JOINT
Exceptions:
1. express stipulation
2. if any of the circumstances enumerated in
art. 2059 should take place
• The creditor can claim from the guarantors
only the shares they are respectively bound to
pay except when solidarity is stipulated or if
any of the circumstances enumerated in Art.
2059 should take place.
RIGHT TO CONTRIBUTION OF GUARANTOR WHO PAYS:
MAY DEMAND OF EACH OF THE OTHERS THE SHARE
WHICH IS PROPORTIONALLY OWING FROM HIM.
• If any of the guarantors should be insolvent,
his share shall be borne by the others
210
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including the paying guarantor in the same
joint proportion.
• The above rule shall not be applicable unless
the payment has been made by virtue of a
judicial demand or unless the principal debtor
is insolvent.
Accrual/Basis of Right: acquired ipso jure by
virtue of said payment without any prior
cession of rights to such guarantor
Defenses: The co-guarantors may set up against
the one who paid the same defenses which
have pertained to the principal debtor against
the creditor and which are not purely personal
to the debtor (Art. 2074).
Procedure When Creditor Sues:
The guarantor cannot be sued with his
principal, much less alone except in Art. 2059.
1. Notice to guarantor of the action
The guarantor must be NOTIFIED.
If the guarantor appears, he is still given
the benefit of exhaustion even if
judgment should be rendered against
him and the principal debtor. Voluntary
appearance does not constitute a
renunciation of his right to excussion
[see Art. 2059(1)].
Guarantor cannot set up the defenses if he
does not appear and it may no longer
be possible for him to question the
validity of the judgment.
2. A guarantor is entitled to be heard before
execution can be issued against him where
he is not a party in the case involving his
principal (procedural due process).
REMEDIES OF PAYING GUARANTOR
1. RIGHT OF INDEMNITY OR
REIMBURSEMENT
2. RIGHT OF SUBROGATION
A.
GUARANTOR’S RIGHT OF INDEMNITY OR
REIMBURSEMENT
GENERAL RULE: Guaranty is a contract of
indemnity. The guarantor who makes
payment is entitled to be reimbursed by the
principal debtor.
NOTE: The indemnity consists of: (DIED)
1. Total amount of the debt – no right to
demand reimbursement until he has
actually paid the debt, unless by the
terms of the contract, he is given the right
before making payment. He cannot
collect more than what he has paid.
MEMORY AID IN CIVIL LAW
2. Legal interest thereon from the time the
payment was made known (notice of
payment is in effect a demand so that if
the debtor does not pay immediately, he
incurs in delay) to the debtor, even
though it did not earn interest for the
creditor. Guarantor’s right to legal interest
is granted by law by virtue of the payment
he has made.
3. Expenses incurred by the guarantor after
having notified the debtor that payment
has been demanded of him by the
creditor; only those expenses that the
guarantor has to satisfy in accordance
with law as a consequence of the
guaranty (Art. 2055) not those which
depend upon his will or own acts or his
fault for these are his exclusive personal
responsibility and it is not just that they be
shouldered by the debtor.
4. Damages if they are due in accordance
with law. General rules on damages
apply.
EXCEPTIONS:
1. Where the guaranty is constituted without
the knowledge or against the will of the
principal debtor, the guarantor can
recover only insofar as the payment had
been beneficial to the debtor (Art. 2050).
2. Payment by a third person who does not
intend to be reimbursed by the debtor is
deemed to be a donation, which,
however, requires the debtor’s consent.
But the payment is in any case valid as to
the creditor who has accepted it (Art.
1238).
3. Wa i v e r o f t h e r i g h t t o d e m a n d
reimbursement.
B.
GUARANTOR’S RIGHT TO SUBROGATION
Subrogation transfers to the person subrogated,
the credit with all the rights thereto appertaining
either against the debtor or against third persons,
be they guarantors or possessors of mortgages,
subject to stipulation in conventional subrogation.
NOTE: This right of subrogation is necessary to
enable the guarantor to enforce the indemnity
given in Art. 2066.
It arises by operation of law upon payment by the
guarantor. It is not necessary that the creditor
cede to the guarantor the former’s rights
against the debtor.
It is not a contractual right. The right of guarantor
who has paid a debt to subrogation does not
stand upon contract but upon the principles of
natural justice.
San Beda College of Law
The guarantor is subrogated by virtue of the
payment to the rights of the creditor, not those
of the debtor.
Guarantor cannot exercise the right of redemption
of his principal (Urrutia & Co v. Morena and Reyes, 28
Phil 261).
If the guarantor paid a smaller amount by virtue of
a compromise, he cannot demand more than
he actually paid.
Effect of Payment by Guarantor:
• Without notice to debtor (Art. 2068): The
debtor may interpose against the
guarantor those defenses which he could
have set up against the creditor at the time
the payment was made, e.g. the debtor
can set up against the guarantor the
defense of previous extinguishment of the
obligation by payment.
• Before Maturity (Art. 2069): Not entitled to
reimbursement unless the payment was
made with the consent or has been ratified
by the debtor (Ratification may be express
or implied)
Effect of Repeat Payment by Debtor (Art. 2070):
GENERAL RULE: Before guarantor pays the
creditor, he must first notify the debtor,
otherwise the latter may set up defenses he
could have set up against the creditor (Art.
2068). If he fails to give such notice and the
debtor repeats payment, the guarantor can
only collect from the creditor and guarantor
has no cause of action against the debtor
for the return of the amount paid by
guarantor even if the creditor should
become insolvent.
EXCEPTION: The guarantor can still claim
reimbursement from the debtor in spite of
lack of notice if the following conditions are
present: (PIG)
a. guarantor was prevented by fortuitous
event to advise the debtor of the
payment; and
b. the creditor becomes insolvent;
c. the guaranty is gratuitous.
Right of Guarantor to Proceed Against Debtor
Before Payment
GENERAL RULE: Guarantor has no cause of
action against debtor until after the former
has paid the obligation.
EXCEPTION (Art. 2071): (SIB-D-TRI)
1. when he is sued for payment;
2. insolvency of the principal debtor;
3. debtor bound himself to relieve himself
to relieve him from guaranty within a
specified person, such has expired;
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2008 CENTRALIZED BAR OPERATIONS
4. debt becomes demandable;
5. lapse of ten years, when there’s no
fixed period for its maturity;
6. reasonable grounds to fear that the
principal will abscond; and
7. the debtor is in imminent danger of
becoming insolvent.
NOTES: Art. 2071 is applicable and
available to the surety (Manila Surety & Fidelity
Co., Inc. vs. Batu Construction & Co. GR No. L-9353.
May 21, 1957).
Remedies of guarantor (remedies are
alternative):
1. obtain release from the guaranty (can only
be exercised against the principal debtor).
Reason: otherwise it will result in the
extinguishment of the contract; or
2. demand a security that shall protect him
from any proceedings by the creditor, and
against the danger of insolvency of the
debtor.
ARTICLE 2066 AND ARTICLE 2071 DISTINGUISHED
Art. 2066 Art. 2071
Provides for the Provides for his
enforcement of the rights of protection before he
the guarantor/surety against has paid but after
the debtor after he has paid he has become
the debt liable
Gives a right of action after Protective remedy
payment before payment.
Substantive right Preliminary remedy
Guarantor of Third Person at Request of
Another (Art. 2072): Guarantor may demand
payment from:
a. person who requested him to be a guarantor;
b. debtor.
EXTINGUISHMENT OF GUARANTY: (RA2CE2)
1. Release in favor of one of the guarantors,
without the consent of the others, benefits
all to the extent of the share of the
guarantor to whom it has been granted;
2. If the creditor voluntarily accepts
immovable or other properties in payment
of the debt, even if he should afterwards
lose the same through eviction or
conveyance of property;
Effect of eviction: Revival of principal
obligation, not the guaranty
3. Whenever by some act of the creditor, the
guarantors even though they are solidarily
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liable cannot be subrogated to the rights,
mortgages and preferences of the former;
4. For the same causes as all other
obligations under Art. 1231;
5. When principal obligation is extinguished;
6. Extension granted to the debtor by the
creditor without the consent of the
guarantor.
EXCEPTIONS:
1. creditor did not collect from 3rd persons
2. obligations payable in installments
3. waiver by guarantor
4. extension granted by creditor on bond
5. extension granted to first-tier obligors
cannot prejudice second-tier parties
Pledge, Mortgage, and Antichresis
Pledge, Mortgage, and Antichresis
COMMON ELEMENTS OF
PLEDGE, MORTGAGE, AND
ANTICHRESIS (Arts. 2085–2092)
ESSENTIAL REQUISITES (Art. 2085)
(SOD)
1. Secures the fulfillment of a principal
obligation;
2. Pledgor, mortgagor, antichretic debtor must
be the absolute owner of the thing pledged or
mortgaged; and
3. Pledgor, mortgagor, antichretic debtor must
have free disposal of their property, or be
legally authorized for such purpose.
Reason for 2 nd and 3rdrequisites: in
anticipation of a foreclosure sale
4. When the principal obligation becomes due,
the subject matter of the pledge, mortgage or
antichresis may be alienated for the payment
to the creditor
NOTES: It may be constituted to secure the
performance of a voidable, unenforceable contract
or natural obligation.
Third persons can pledge or mortgage their own
property to secure the principal obligation.
MEMORY AID IN CIVIL LAW
BOND
An undertaking that is sufficiently secured, and not
cash or currency
BONDSMAN
A surety offered in virtue of a provision of law
or a judicial order. He must have the
qualifications required of a guarantor and in
special laws like the Rules of Court.
NOTES: Judicial bonds constitute merely a
special class of contracts of guaranty by the fact
that they are given “in virtue… of a judicial order.”
If the person required to give a legal or judicial
bond should not be able to do so, a pledge or
mortgage sufficient to cover the obligation shall
admitted in lieu thereof (Art. 2083)
A judicial bondsman and the sub-surety are NOT
entitled to the benefit of excussion because
they are not mere guarantors, but sureties
whose liability is primary and solidary (Art.
2084).
The accommodation pledgor or mortgagor is not
solidarily bound with the principal obligor but
his liability extends only to the property
pledged or mortgaged. Should there be any
deficiency, the creditor has recourse on the
principal debtor who remains to be primarily
bound.
The law grants to the accommodation pledgor or
mortgagor the same rights as a guarantor and
he cannot be prejudiced by any waiver of
defense by the principal debtor.
Prohibition Against Pactum
Commissorium
Stipulation whereby the thing used as security
shall automatically become the property of the
creditor in the event of non-payment of the
principal obligation in due time.
Requisites:
1. There should be a pledge, mortgage, or
antichresis of property.
2. There is a stipulation for an automatic
appropriation by the creditor of the
property in the event of nonpayment of
principal obligation.
San Beda College of Law
GENERAL RULE: Pactum Commissorium is
forbidden by law and any stipulation to that
effect is declared null and void.
Reason: the amount of the loan is ordinarily
less than the real value of the thing pledged
or mortgaged.
EXCEPTION: The pledgee may appropriate the
thing pledged if after the first and second
auctions, the thing is not sold (Art. 2112). The
creditor shall be obliged to acquittance for his
entire claim. This act shall be considered as
full payment of the claim.
NOTE: Only the prohibited stipulation is void and
shall not affect the validity of the principal
obligation.
Capability to secure all kinds of
obligations (i.e. pure or conditional)
(Art. 2091)
INDIVISIBILITY (Art. 2089)
A pledge, mortgage, or antichresis is indivisible,
even though the debt may be divided among
the successors in interest of the debtor or of
the creditor.
Their indivisibility is not affected by the fact that
the debtors are jointly or not solidarily liable
NOTE: Neither the debtor’s heir who has paid part
of the debt cannot ask for proportionate
extinguishment, nor creditor’s heir who received
his share of the debt return the pledge or cancel
the mortgage as long as the debt is not completely
satisfied.
A contract wherein the debtor delivers to the
creditor or to a third person a movable or
document evidencing incorporeal rights for the
purpose of securing fulfillment of a principal
obligation with the understanding that when the
obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions.
Special Requisites (in addition to the common
essential requisites):
1. Possession of the thing pledged must be
transferred to the creditor or a third person
by agreement (Art. 2093)
Absent delivery, the creditor acquires
no right to the property because pledge is
merely a lien and possession is
indispensable to the right of a lien
2. Subject Matter: movable property and
incorporeal rights evidenced by
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2008 CENTRALIZED BAR OPERATIONS
The mere embodiment of a real mortgage and a
chattel mortgage in one document does not
have the effect of fusing both securities into an
indivisible whole, both remain distinct
agreements.
EXCEPTIONS:
1. Where each one of several things
guarantees a determinate portion of the
credit
2. Where only a portion of the loan was
released
3. Where there was failure of consideration.
4. Where there is no debtor-creditor
relationship as when a third party is the
pledgor or mortgagor
NOTES: The mortgagee may legally foreclose the
real estate mortgage extrajudicially and waive the
chattel mortgage foreclosure, and maintain
instead a personal action for the recovery of the
unpaid balance of the credit (Phil. Bank of Commerce v.
Macadaeg, GR No L-14174, October 31, 1960).
Possession of an antichretic creditor,
mortgagee or pledgee is not in the
concept of an owner and thus the
subject property cannot be acquired
through prescriptive prescription,
UNLESS, they renounce their status as
such.
Pledgor, mortgagor, antichretic debtor
retains ownership of the thing given as a
security.
Pledge (Arts. 2093–2123)
documents of title and the instruments
proving the right pledged shall be
delivered to the creditor, and if negotiable
must be endorsed (Art. 2094); and
3. The description of the thing pledged and
the date must appear in a public
instrument to bind third persons, but not
for the validity of the contract (Art. 2096).
Reason: to forestall fraud because a
debtor might attempt to conceal his
property by simulating a pledge.
Kinds:
1. Conventional / Voluntary – created by
contract
2. Legal – created by operation of law
(examples: Arts. 546, 1731 and 1914
NCC)
214 MEMORY AID IN CIVIL LAW
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Characteristics: PLEDGEE
a. Real contract – it is perfected by the Rights Obligations
delivery of the thing pledged;
(D-SBC2-BA2R3OPS) (CUDA3)
b. Accessory contract – it has no 1.Option to demand 1.Take care of
independent existence of its own replacement or immediate the thing with
Exception: may guarantee the payment of the debt in case the diligence
performance of a voidable or of deception as to substance of a good
unenforceable contract or a natural or quality father of a
obligation (Art. 2052)
• remedies are alternative family and be
2.To sell at public auction in liable for the
c. Unilateral contract – obligation is solely case of reasonable grounds loss or
on the part of the creditor to return the to fear destruction or deterioration
thing subject thereof upon the fulfillment of impairment of the thing of such
the principal obligation; and without his fault 2.Not to use
d. Subsidiary contract – the obligation • this right is more superior to thing unless
incurred does not arise until the fulfillment the right given in Art. 2107. authorized or
of the principal obligation which is The proceeds shall be a by the owner
secured. security for the principal or its
obligation preservation
Extent of pledge: Unless stipulated otherwise, 3.To bring actions pertaining to requires its
pledge extends to the fruits, interests or the owner or to defend it use
earnings of the thing. against third persons 3.Not to deposit
4.To choose which of several the thing with
things pledged shall be sold a 3rd person
PLEDGOR 5.To collect and receive amount unless so
due on credit pledged stipulated
Rights Obligations
6.To bid at the public auction, 4.Responsibility
1. To demand return in case of 1. To advise unless he is the only bidder for acts of
reasonable grounds to fear the pledgee 7.To appropriate the thing in agents and
destruction or impairment of the of the flaws case of failure of the 2nd employees as
thing without the pledgee’s fault, of the thing
public auction regards the
subject to the duty of 2. Not to
replacement demand the 8.To apply said fruits, interests thing
Requisites: return of the or earnings to the interest, if 5.To advise
a. pledgor has reasonable thing until any, then to the principal of pledgor of
grounds to fear the destruction after full the credit danger to the
or impairment of the thing payment of 9.To retain excess value thing
pledged the debt, received in the public sale 6.To advise
b. no fault of the pledge including 10.To retain the thing until after pledgor of the
c. pledgor offers another thing interest due full payment of the debt result of the
which is of the same kind and thereon and 11.To be reimbursed for the public auction
quality as the former expenses
expenses made for the
d. pledge does not choose to incurred for
exercise his right to cause the its preservation of the thing
thing to be sold at public preservation pledged
auction 12.To object to the alienation of
NOTE: The pledgee’s right to the thing
have the thing sold at public sale 13.To possess the thing
granted under Art. 2108 is 14.To sell at public auction in
superior to the right granted case of non-payment of debt
under Art. 2107. at maturity
2. To bid and be preferred at the
public auction
3. To alienate the thing pledged
provided the pledgee consents to Prohibition against Double Pledge
the sale
Property which has been lawfully pledged to
4. To ask that the thing pledged be
deposited in one of the following one creditor cannot be pledged to another as
cases: long as the first one subsists.
a. if the creditor uses the thing Extinguishment of Pledge: (CRAPSA)
without authority
b. he misuses the thing 1. For the same causes as all other
c. the thing is in danger of being obligations
lost or impaired because of
negligence or willful act of the 2. Return of the thing pledged by the
pledgee pledgee to the pledgor
San Beda College of Law
3. Statement in writing by the pledgee that
he renounces or abandons the pledge
4. Payment of the debt
5. Sale of thing pledged at public auction
6. Appropriation under Art. 2112
NOTE: The possession by the debtor or owner of
the thing pledged subsequent to the perfection of
the pledge gives rise to a prima facie presumption
that the thing has been returned and, therefore,
that the pledge has been extinguished but not the
principal obligation itself (Art. 2110).
Requirements for Sale of Thing Pledged at
Public Auction:
1. The debt is due and unpaid.
2. Sale must be at a public auction.
3. There must be notice to the pledgor and
owner, stating the amount due.
4. Sale must be with the intervention of a
notary public.
Effect of Sale of the Thing Pledged:
1. The sale of the thing pledged shall
extinguish the principal obligation, whether
Real Estate Mortgage (Arts. 2124-2131)
A contract whereby the debtor secures to the
creditor the fulfilment of a principal obligation,
specially subjecting to such security immovable
property or real rights over immovable property in
case the principal obligation is not complied with
at the time stipulated.
NOTES: As an accessory contract, its
consideration is the same as that of the
principal contract from which it receives life.
A mortgage does not involve a transfer,
cession or conveyance of property but only
constitutes a lien thereon.
A mortgage gives the mortgagee no right or
claim to the possession of the property, and
therefore, a mere mortgagee has no right to
eject an occupant of the property
mortgaged unless the mortgage should
contain some provision to that effect.
Special Requisites:
1. It can cover only immovable property and
alienable real rights imposed upon
immovables;
2. It must appear in a public instrument;
3. Registration in the registry of property is
necessary to bind third persons, but not for
the validity of the contract.
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2008 CENTRALIZED BAR OPERATIONS
or not the proceeds of the sale are equal
to the amount of the principal obligation,
interest and expenses in a proper case
2. If the price of the sale is more than the
amount due the creditor, the debtor is not
entitled to the excess unless the contrary
is provided
3. If the price of the sale is less, the creditor
is not entitled to recover the deficiency
even if there is a stipulation to that effect
LEGAL PLEDGE:
In legal pledge, there is no definite period for the
payment of the principal obligation. The
pledgee must make a demand for the payment
of the amount due him; otherwise he cannot
exercise the right of sale at public auction (Art.
2122).
The rules governing conventional pledge apply.
The remainder of the price pertains to the debtor
Procedure: Sell the thing at a public auction after
one month from the date of demand;
otherwise, the debtor may require the return of
the thing.
Order of foreclosure cannot be refused
on the ground that the mortgage was not
registered provided no innocent third
parties are involved.
Kinds:
1. Voluntary – agreed to by the parties or
constituted by the will of the owner of the
property on which it is created
2. Legal – one required by law.
The persons in whose favor the law
establishes a mortgage have no other right
than to demand the execution and the
recording of the document in which the
mortgage is formalized (Art. 2125 par 2)
3. Equitable – one which, although lacking
the formalities of a mortgage, shows the
intention of the parties to make the
property a security for a debt
PLEDGE AND REAL MORTGAGE DISTINGUISHED
PLEDGE REAL MORTGAGE
Constituted on movables Constituted on
immovables
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PLEDGE REAL MORTGAGE
Property is delivered to Delivery is not
pledgee or by common necessary
consent to a third person
Not valid against third Not valid against
Special Rights:
persons unless a third persons
description of the thing unless registered
pledged and date of pledge
appear in a public
instrument
NOTES: Absent express stipulation to the
contrary, the mortgage includes the accessions,
improvements, growing fruits and income of the
property not yet received when the obligation
becomes due and to the amount of the indemnity
granted or owing to the proprietor from the
insurers of the property mortgaged, or in virtue of
expropriation for public use (Art. 2127).
The mortgage credit may be alienated or assigned
to a 3rd person, in whole or in part, with the
formalities required by law (Art. 2128). In this
case, the assignee may foreclose the
mortgage in case of non-payment by the
debtor.
Future property cannot be an object of a contract
of mortgage (Art. 2085[2]) However, a
stipulation subjecting to the mortgage lien,
FORECLOSURE
properties (improvements) which the
mortgagor may subsequently acquire install, or
use in connection with real property already
mortgaged belonging to the mortgagor is valid
(People’s Bank and Trust Co. v. Dahican Lumber Co., G.R.
No. L-17463 May 16, 1967).
Validity and Effect
“BLANKET OR DRAGNET CLAUSE”
One which is specifically phrased to subsume
all debts of past or future origins. Mortgages of
this character enable the parties to provide
continuous dealings , the nature or extent of
which may not be known or anticipated at the
time, and they avoid the expense and
inconvenience of executing a new security on
each new transaction (Prudential Bank v. Don A.
Alviar, et al., G.R. No. 150197, July 28, 2005; Cuyco v.
Cuyco, GR. No. 168736, April 19, 2006). Provisions
of this nature are carefully scrutinized and
strictly construed particularly when the
mortgage contract is one of adhesion.
Purpose:
Kinds of Foreclosure:
Operates as convenience and accommodation
to borrowers as it makes available additional
funds without the parties having to execute
additional security documents (Prudential Bank v.
Alviar, supra).
Nature:
A mortgage with a dragnet clause is an “offer”
by the mortgagor to the bank to provide the
MEMORY AID IN CIVIL LAW
security of the mortgage for advances of and
when they were made. It can be said that the
“offer” was not accepted by the bank when a
subsequent advance was made because of
new security (Prudential Bank v. Alviar. supra).
1. Mortgagor – To alienate the mortgaged
property but the mortgage shall remain
attached to the property
NOTES: A stipulation forbidding the owner
from alienating the immovable mortgage
shall be void (Art. 2130) being contrary to
public policy inasmuch as the transmission
of property should not be unduly impeded.
In a sale w/ assumption of mortgage,
the alienation needs the consent of the
mortgagee.
2. Mortgagee – To claim from a 3rd person in
possession of the mortgaged property the
payment of the part of the credit secured
by the which said third person possesses
(Art. 2129)
NOTE: It is necessary that prior demand
for payment must have been made on the
debtor and the latter failed to pay (BPI v.
Concepcion & Hijos, Inc.53 Phil 906).
Remedy available to the mortgagee by which
he subjects the mortgaged property to the
satisfaction of the obligation to secure that for
which the mortgage was given
1. When the principal obligation is not paid
when due, the mortgagee has the right to
foreclose the mortgage and to have the
property seized and sold, and to apply the
proceeds thereof to the payment of
principal obligation.
2. The power to foreclose resides on the
mortgagee.
3. In case of deficiency, the debtor is
required to pay the same even after
foreclosure.
4. The rule governing public notice of
foreclosure must be strictly complied with
and slight deviations will invalidate the
sale or render it voidable.
1. JUDICIAL – ordinary action for foreclosure
under Rule 68 of the Rules of Court
2. EXTRAJUDICIAL – when mortgagee is
given a special power of attorney to sell
the mortgaged property by public auction,
under Act No. 3135
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JUDICIAL AND EXTRAJUDICIAL FORECLOSURE sale at public auction. It is null and void for the
DISTINGUISHED property must be sold to the highest bidder.
Parties cannot, by agreement, contravene the law
Extrajudicial and interfere with the lawful procedure of the
Judicial foreclosure
foreclosure courts (BPI v. Yulo. 31 Phil 476).
There is court No court intervention
intervention.
EXTRAJUDICIAL FORECLOSURE OF REAL
Decisions are Not appealable, it is PROPERTY (Act No. 3135)
appealable. immediately executory.
Extra-judicial foreclosure must be stipulated in
Order of court cuts off Foreclosure does not
the contract.
all rights of the cut off right of all
parties impleaded. parties involved. The law covers only real estate mortgages. It
There is equity of There is right of is intended merely to regulate the
redemption except on redemption. extrajudicial sale of the property
banks which provides mortgaged.
for a right of The authority to sell is not extinguished by the
redemption. death of the mortgagor (or mortgagee) as it
Period of redemption Period to redeem start is an essential and inseparable part of a
starts from the finality from date of bilateral agreement (Perez v. PNB. GR No.
of the judgment until registration of L-21813. July 30, 1966)
order of confirmation. certificate of sale. No sale can be legally made outside the
No need for a special Special power of province in which the property sold is
power of attorney in attorney in favor of situated; and in case the place within said
the contract of mortgagee is needed province in which the sale is to be made is
mortgage in the contract the subject of stipulation, such sale shall be
made in the said place in the municipal
Governed by Rule 68 Governed by Act. building of the municipality in which the
of the Rules of Court 3135 property or part thereof is situated.
NOTES: A foreclosure sale retroacts to the date of Procedure for Extrajudicial Foreclosure of
registration of the mortgage and that a person Both Real Estate Mortgage under Act No. 3135
who takes a mortgage in good faith and for and Chattel Mortgage under Act No. 1508 (A.M.
valuable consideration, the record showing clear No. 99-10-05-0, January 15, 2000, further amended on August
title to the mortgagor, will be protected against 7, 2001)
equitable claims on the title in favor of third
persons, of which he had no actual or constructive 1. Filing of application before the Executive
notice (St. Dominic Corporation v. IAC, GR No. 70623, June Judge through the Clerk of Court
30, 1987) 2. Clerk of Court will examine whether the
Mere inadequacy of the price obtained at the requirement of the law have been
sheriff’s sale will not be sufficient to set aside complied with, that is, whether the notice
the sale unless “the price is so inadequate as of sale has been posted for not less than
to shock the conscience of the court” taking 20 days in at least three (3) public places
into consideration the peculiar circumstances of the municipality or city where the
attendant thereto (Sulit v. CA, G.R. No. 119247, property is situated, and if the same is
February 17, 1997). worth more than P400.00, that such notice
has been published once a week for at
Should there remain a balance due to the least three (3) consecutive weeks in a
mortgagee after applying the proceeds of the newspaper of general circulation in the city
sale, the mortgagee is entitled to recover the of municipality.
deficiency (Rule 68 of the Rules of Court). This rule
3. The certificate of sale must be approved
DOES NOT apply extra-judicial foreclosure
by the Executive Judge.
real mortgage.
4. In extrajudicial foreclosure of real
The action to recover a deficiency after
mortgages in different locations covering
foreclosure prescribes after 10 years from the
one indebtedness, only one filing fee
time the right of action accrues (Arts. 1142 &
corresponding to such debt shall be
1144).
collected.
5. The Clerk of Court shall issue certificate of
STIPULATION OF UPSET PRICE OR “TIPO” payment indicating the amount of
indebtedness, the filing fees collected, the
It is a stipulation in a mortgage of real property of
mortgages sought to be foreclosed, the
minimum price at which the property shall be sold,
description of the real estates and their
to become operative in the event of a foreclosure
respective locations.
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6. The notice of sale shall be published in a
newspaper of general circulation pursuant
to Section 1, PD No. 1079.
7. The application shall be raffled among all
sheriffs.
8. After the redemption period has expired,
the Clerk of Court shall archive the
records.
9. No auction sale shall be held unless there
are at least two (2) participating bidders,
otherwise the sale shall be postponed to
another date. If on the new date there
shall not be at least two bidders, the sale
shall then proceed. The names of the
bidders shall be reported to the Sheriff of
the Notary Public, who conducted the sale
to the Clerk of Court before the issuance
of the certificate of sale.
NOTES: The Mortgagor and Mortgagee have no
right to waive the posting and publication
requirements under Act. No. 3135. Notices are
given to secure bidders and prevent a sacrifice of
the property. Clearly, the statutory requirements of
posting and publication are mandated, not for the
mortgagor’s benefit, but for the public or third
persons. Failure to comply with the statutory
requirements as to publication of notice of auction
sale constitutes a jurisdictional defect which
invalidates the sale. Lack of republication of notice
of foreclosure sale made subsequently after the
original date renders such sale void (PNB v.
Nepomuceno Productions Inc. G.R. No. 139479. December 27,
2002).
Sec 3 of Act 3135 does not require personal or
any particular notice on the mortgagor much
less on his successors-in-interest where there
is no contractual stipulation therefor. Hence,
unless required in the mortgage contract, the
lack of such notice is not a ground to set aside
a foreclosure sale.
Neither does Sec 3 require posting of notice of
sale on the mortgage property and the
certificate of posting is not required, much less
considered indispensable, for the validity of a
foreclosure sale.
REDEMPTION
It is the transaction by which the mortgagor
reacquires or buys back the property which may
have passed under the mortgage, or divests the
property of the lien which the mortgage may have
created.
NOTES: A sale by the mortgagor to a third
party of the mortgaged property during the
period for redemption transfers only to said
third person the right to redeem the property
and the right to possess, use and enjoy the
same during said period.
Where the sale with assumption of
mortgage was not registered and made without
MEMORY AID IN CIVIL LAW
the consent of the mortgagee, the buyer,
thereof, was not validly substituted as debtor
and, hence, had no right to redeem (Bonnevie v.
CA. G.R. No. L-4910. October 24, 1983).
Kinds of Redemption:
1. Equity of Redemption – right of
mortgagor to redeem the mortgaged
property after his default in the
performance of the conditions of the
mortgage within the 90-day period from
the date of the service of the order of
foreclosure or even thereafter but before
the confirmation of the sale. Applies to
judicial foreclosure of real mortgage and
chattel mortgage foreclosure.
NOTE: Redemption of the banking
institutions is allowed within one year from
confirmation of sale.
2. Right of Redemption – right of mortgagor
to redeem the mortgaged property within
one year from the date of registration of
the certificate of sale. Applies only to
extrajudicial foreclosure of real mortgage.
NOTE: The right of redemption, as long as
within the period prescribed, may be
exercised regardless of whether or not the
mortgagee has subsequently conveyed
the property to some other party (Sta. Ignacia
Rural Bank, Inc. v. CA. GR No. 97872. March 1,
1994).
Period of Redemption
1. Extra-judicial (Act No. 3135)
a. natural person – one year from
registration of the certificate of sale
with Registry of Deeds
b. juridical person – same rule as
natural person
c. juridical person (mortgagee is bank) –
three months after foreclosure or
before registration of certificate of
foreclosure which ever is earlier (Sec.
47, of General Banking Law)
2. Judicial – before confirmation of the sale
by the court except for banking institutions
which will be one year from the
confirmation of sale
NOTE: Allowing a redemption after the lapse
of the statutory period, when the buyer at the
foreclosure sale does not object but even
consents to the redemption, will uphold the
policy of the law which is to aid rather than
defeat the right of redemption (Ramirez v. CA, GR
No. 98147, March 5, 1993).
Amount of the Redemption Price:
1. Mortgagee is not a bank (Act No. 3135, in
relation to Sec. 28, Rule 39 of Rules of Court)
a. purchase price of the property
San Beda College of Law
b. 1% interest per month on the
purchase price
c. taxes paid and amount of purchaser’s
prior lien, if any, with the same rate of
interest computed from the date of
registration of sale, up to the time of
redemption
2. Mortgagee is a bank (GBL 2000)
a. amount due under the mortgage
deed
b. interest
c. cost and expenses
NOTE: Redemption price in this case is
reduced by the income received from the
property.
MORTGAGEE IN POSSESSION:
One who has lawfully acquired actual or
constructive possession of the premises
mortgaged to him, standing upon his rights as
mortgagee and not claiming under another title
for the purpose of enforcing his security upon
such property or making its income to pay his
debt.
A contract whereby the creditor acquires the right
to receive the fruits of an immovable of the debtor,
with the obligation to apply them to the payment of
the interest, if owing, and thereafter to the
principal of his credit (Art. 2132)
• An antichresis is also indivisible in nature.
Characteristics
1. Accessory contract – it secures the
performance of a principal obligation.
2. Formal contract – it must be in a
specified form to be valid (Art. 2134).
Special Requisites (in addition to the common
essential requisites):
1. It can cover only the fruits of an
immovable property;
2. Delivery of the immovable is necessary for
the creditor to receive the fruits and not
that the contract shall be binding;
3. Amount of principal and interest must be
specified in writing; and
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2008 CENTRALIZED BAR OPERATIONS
Right to Possession of Third Persons as
Purchaser:
• Writ of Possession – an order whereby
a sheriff is commanded to place a person
in possession of real or personal property
• Before expiration of redemption period –
ex parte application plus posting of a bond
• After lapse of redemption period –
Purchaser is not obliged to bring a
separate suit for possession. He must
invoke the aid of the courts and ask a writ
of possession.
The suspension of the implementation of the
writ of possession not allowed after
redemption period
The purchaser is entitled to writ of possession
despite the fact that there is a lessee
unless the lessee is registered with the
Register of Deeds or he has actual
knowledge thereof (Ibasco v. Caguioa. G.R. No.
L-63861. August 19, 1986).
If mortgagor refuses to surrender property, the
remedy is to file an ordinary action for the
recovery of possession in order that the
mortgagor may be given the opportunity to
be heard.
Antichresis (Arts. 2132-2139)
4. Express agreement that debtor will give
possession of the property to creditor and
that the latter will apply the fruits to the
interest, if any, then to the principal of his
credit.
$ In the absence of this requisite, the
contract shall be deemed to be one of
mortgage
NOTE: The obligation to pay interest is not the
essence of the contract of antichresis, there
being nothing in the Code to show that
antichresis is only applicable to securing the
payment of interest-bearing loans. On the
contrary, antichresis is susceptible of
guaranteeing all kinds of obligations, whether
pure or conditional in nature.
ANTICHRESIS AND PLEDGE DISTINGUISHED
Antichresis Pledge
Refers to real Refers to personal
property property
Perfected by mere Perfected by delivery of
consent the thing pledged
Consensual contract Real Contract
220 MEMORY AID IN CIVIL LAW
Credit Transactions

ANTICHRESIS AND REAL MORTGAGE DISTINGUISHED Obligations of Antichretic Creditor:

Antichresis Real Mortgage 1 To pay taxes and charges on the estate,

including necessary expenses
Property is delivered to Debtor usually
creditor. retains possession NOTE: Creditor may avoid said obligation
of the property. by compelling debtor to reacquire
enjoyment of the property, unless there is
Creditor acquires only the Creditor does not a stipulation to the contrary
right to receive the fruits of have any right to
the property, hence, it does receive the fruits; 2 To apply all the fruits, after receiving them,
not produce a real right. but the mortgage to the payment of interest, if owing, and
creates a real right thereafter to the principal
over the property. 3 To render an account of the fruits to the
The creditor, unless there is The creditor has debtor
stipulation to the contrary, is no such obligation. 4 To bear the expenses necessary for its
obliged to pay the taxes and preservation and repair
charges upon the estate.
Remedies of Creditor in Case of Non-payment
It is expressly stipulated that There is no such of Debt
the creditor given obligation on part
possession of the property of mortgagee. 1. Action for specific performance; or
shall apply all the fruits 2. Petition for the sale of the real property as
thereof to the payment of in a foreclosure of mortgages under Rule
interest, if owing, and 68 of the Rules of Court (Art. 2137).
thereafter to the principal.
NOTES: The parties, however, may agree on
The subject matter of both is real property. an extrajudicial foreclosure in the same
manner as they are allowed in contracts of
mortgage and pledge (Tavera v. El Hogar Filipino,
Inc. GR No. L-45963. October 12, 1939).
A stipulation authorizing the antichretic
creditor to appropriate the property upon the
non-payment of the debt within the agreed
period is void (Art. 2088).

Chattel Mortgage (Arts. 2140-2141)

A contract by virtue of which personal property is mortgagor resides; if property is located in
recorded in the Chattel Mortgage Register as a a different province, registration in both
security for the performance of an obligation (Art. provinces required;
2140).
3. Description of the property as would
enable the parties or other persons to
identify the same after reasonable
Characteristics
investigation and inquiry;
1. Accessory contract – it is for the purpose
4. Accompanied by an affidavit of good faith
of securing the performance of a principal
to bind third persons, but not for the
obligation.
validity of the contract;
2. Formal contract – registration in the
5. It can cover only obligations existing at the
Chattel Mortgage Register is
time the mortgage is constituted.
indispensable for its validity.
NOTE: A mortgage containing a stipulation in
3. Unilateral contract – it produces only
regard to future advances in the credit will take
obligations on the part of the creditor to
effect only from the date the same are made
free the thing from the encumbrance on
and not from the date of the mortgage (Jaca v.
fulfillment of the obligation.
Davao Lumber Co., G.R. No. L-30849 March 29, 1982).
Special Requisites:
Effect of Registration: Creates a real right
1. It can cover only personal or movable
The registration of the chattel mortgage is an
property in general; however, the parties
effective and binding notice to other creditors
may treat as personal property that which
of its existence and creates a real right or a
by its nature would be real property;
lien which, being recorded, follows the chattel
2. Registration of the mortgage with the wherever it goes. The registration gives the
Chattel Mortgage Register where the mortgagee symbolical possession (Northern
San Beda College of Law 221
2008 CENTRALIZED BAR OPERATIONS

Motors, Inc. v. Coquia. GR No. L-40018. December 15, FORECLOSURE OF CHATTEL MORTGAGE
1975).
NOTES: Foreclosure sale in chattel mortgage
Effect of Failure to Register Chattel Mortgage is by public auction under Act No. 1508, but
in the Chattel Mortgage Registry the parties may stipulate that it be by private
sale.
Article 2140 makes the recording in the Chattel
Mortgage Register an essential requisite but if The mortgagee may, after thirty (30) days
the instrument is not recorded, the mortgage is from the time of the condition broken, cause
nevertheless binding between the parties. But the mortgaged property to be sold at public
the person in whose favor the law establishes auction by a public officer. The 30-day period is
a mortgage has no other right than to demand also a grace period for the mortgagor to
the execution and the recording of the discharge the mortgage obligation. After the
document. sale of the chattel at public auction, the right of
redemption is no longer available to the
mortgagor (Cabral v. Evangelista. 28 SCRA 1000).
CHATTEL MORTGAGE AND PLEDGE DISTINGUISHED
Application of Proceeds of Sale:
Chattel Mortgage Pledge 1. Costs and expenses of keeping and sale
Delivery of the personal Delivery of the thing 2. Payment of the obligation secured by the
property to the mortgage pledged is necessary mortgage
is not necessary
3. Claims of persons holding subsequent
Registration in the Chattel Registration not mortgages in their order
Mortgage Registry is necessary to be valid
necessary for its validity 4. The balance, if any, shall be paid to the
mortgagor or person holding under him.
The procedure for sale is The procedure for
found under Section 14 of sale is found under NOTES: The creditor may maintain an action
Act No. 1508, as Art. 2112 of the Civil for the deficiency, except if the chattel
amended. Code. mortgage is constituted as security for the
purchase of personal property payable in
If property is foreclosed, Debtor is not entitled
installments.
the excess over the to excess unless
amount due goes to the otherwise agreed or The action for deficiency may be brought
debtor. except in case of within ten (10) years from the time the
legal pledge. cause of action accrues.
If there is deficiency after If there is deficiency, Only equity of redemption is available to the
foreclosure, creditor is creditor is not entitled mortgagor; the latter can no longer redeem
entitled to recover the to recover after the confirmation of the foreclosure
deficiency from the notwithstanding any sale.
debtor, except under Art. stipulation to the
Right of Redemption
1484. contrary.
When the condition of a chattel mortgage is
Subject matter of both is movable property.
broken the following may redeem:
a. mortgagor;
AFFIDAVIT OF GOOD FAITH b. person holding a subsequent
Oath in a contract of chattel mortgage wherein mortgage;
the parties "severally swear that the mortgage c. subsequent attaching creditor.
is made for the purpose of securing the
obligation specified in the conditions thereof An attaching creditor who so redeems shall be
and for no other purposes and that the same is subrogated to the rights of the mortgagee
a just and valid obligation and one not entered and entitled to foreclose the mortgage.
into for the purpose of fraud” (Sec. 5, Chattel The redemption is made by paying or
Mortgage Law). delivering to the mortgagee the amount due
Effect of Absence on such mortgage and the costs, and
expenses incurred by such breach of
The special affidavit is required only for the condition before the sale thereof (Sec 13, Act
purpose of transforming an already valid No. 1508).
mortgage into “preferred mortgage.” Thus, it is
not necessary for the validity of the chattel Right to Possession of Foreclosed Property in
mortgage itself but only to give it a preferred Chattel Mortgage
status. In other words, its absence vitiates the When default occurs and the creditor desires
mortgage only as against third persons without to foreclose, the creditor has the right to take
n o t i c e l ike creditors and subsequent the property as a preliminary step for its sale.
encumbrances.
222
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NOTE: Where the debtor refuses to yield the
property, the creditor’s remedy is to institute an
action either to effect judicial foreclosure
Concurrence and Preference of Credits
(Arts. 2236!2251)
Concurrence and Preference of Credits
CONCURRENCE OF CREDITS
Possession by two or more creditors of equal
rights or privileges over the same property or all of
the property of the debtor
PREFERENCE OF CREDITS
Right held by a creditor to be preferred in the
payment of his claim above others out of the
debtor’s assets. It is the right to be paid first.
NATURE & EFFECT OF PREFERENCE:
General Rule: Debtors are obliged to pay their
creditors when the debt becomes due and
demandable.
1. Exception to the general rule –There
should be no rules as to who should be
paid first. Preference applies ONLY when
there are 2 or more creditors with separate
claims against a debtor who has
insufficient property to answer for all his
obligations. Since it is an exception to the
general rule, the law as to preferences is
strictly construed.
2. Does not create an interest in property –
preference simply creates a right to be
paid first from the proceeds of the sale of
property of the debtor. It does not create a
lien on the property itself, but merely a
preference in the application of the
proceeds of the property after it is sold.
3. The creditor does not have the right to
take the property and sell it as against
another creditor – preference applies after
a sale, and it is a question of application of
the proceeds after it is sold.
4. It must be asserted – if the right claimed is
not asserted and maintained, it is lost. If
property has not been seized, it is open to
seizure by another.
5. It must be maintained – where a creditor
released his levy, leaving the property in
possession of the debtor, thereby
indicating that he did not intend to press
his claim further as to that specific
MEMORY AID IN CIVIL LAW
directly or to secure possession (REPLEVIN)
as a preliminary to the sale contemplated in
Section 14 or Act. No. 1508.
p r o p e r t y, h e i s d e e m e d t o h a v e
abandoned his claim of preference.
The rules on preference are applicable only
when:
1. there are 2 or more creditors
2. with separate and distinct claims
3. against the same debtor
4. who has insufficient property
• There must be a proceeding such as an
insolvency proceeding wherein the creditors
can file their claims. The right becomes
significant only after the properties of the
debtor have been inventoried and
liquidated, and the claims of the various
creditors have been established. Prior to
the proceedings, the debtor has no way of
ascertaining who the creditors are, and has
no liquidated property out of which he can
pay them.
PREFERENCE OF CREDIT AND LIEN DISTINGUISHED
Preference of Credit Lien
Applies only to claims which Creates a charge
do not attach to specific on a particular
properties property
Liability of Debtor ’s Property for His
Obligations
GENERAL RULE: Debtor is liable with all his
property, present and future, for the
fulfillment of his obligations (Art. 2236).
EXEMPT PROPERTY:
1. Present property – those provided
under Arts. 155 and 205 of the Family
Code, Sec. 13, Rule 39 of the Rules of
Court, and Sec. 118 of the Public Land
Act
2. Future property – a debtor who obtains
a discharge from his debts on account
of his insolvency, is not liable for the
unsatisfied claims of his creditors with
said property subject to certain
San Beda College of Law
exceptions expressly provided by law
(Secs. 68, 69, The Insolvency Law [Act No.
1956]).
3. Property under legal custody and those
owned by municipal corporations
necessary for governmental purposes
NOTE: Art. 2238 – If one of the spouses is
insolvent, the assets of the conjugal
partnership of gains (CPG) or absolute
community (AC) do not pass to the assignee in
insolvency elected by the creditors or
appointed by the court. Reason: the conjugal
partnership of gains or absolute community is
distinct from the individual spouses.
$ The exemption applies provided that:
1. the CPG or AC subsists; and
2. the obligations of the insolvent spouse
have not redounded to the benefit of
the family
General Categories of Credit:
1. Special Preferred Credits – those listed in
Arts. 2241 and 2242 shall be considered as
mortgages and pledges of real or personal
property or liens (Art. 2243). Hence, they are
not included in the insolvent debtor's assets.
NOTES: Arts. 2241 and 2242 do not give the
order of preference or priority of payment.
They merely enumerate the credits which
enjoy preference with respect to specific
movables or immovables. With respect to the
same specific movables or immovables,
creditors, with the exception of the State (No.
1), merely concur.
Take note of the following under Art. 2241:
(1) Taxes – the tax must be due on the
movable itself, (2) Misappropriation,
breach of trust, malfeasance of public
officers – a) the acquisition must have
been in the performance of official
functions. and b) the property must still be
in the hands of the public official. If it is
sold to a purchaser for value and in good
faith, there can be no more claim on the
said movable, (4) Guaranteed w/ a pledge
or chattel mortgage – to be a preferred
credit: a) Pledge – must be embodied in a
public instrument, b) Chattel mortgage –
must be registered with the Chattel
Mortgage registry.
Under the last par. of 2241 – if the movable is
wrongfully taken, the preferred creditor
may get it back w/in 30 days through an
accion subrogaotria, exercising the right of
the debtor to recover property wrongfully
taken from him granted under Art. 559.
The last paragraph of Art. 2241 applies
only when the right of ownership in such
property continues in the debtor. As such,
the remedy under Art. 2241 is not
applicable to cases where the debtor has
223
2008 CENTRALIZED BAR OPERATIONS
parted with his ownership of the property
in question, as where he has sold the
property (Peña vs. Mitchell, 9 Phil 587).
Take note of the following under Art. 2242:
(1) Taxes – this provision pertains to real
property taxes. Thus, capital gains tax is
NOT a preferred credit because it is really
a tax on income and not on the property
itself, (2) Unpaid seller – there is NO
NEED to register the sale in order for the
unpaid seller to have a preferred claim
against the immovable, (5) Mortgage – it
must be registered in the Registry of
Property in order for the credit to be a
preferred claim against the immovable. A
recorded mortgage credit is superior to an
unrecorded unpaid vendor’s lien (De Barretto
v. Villanueva, GR No. L-14938, January 28, 1961),
(7) Credits annotated in the Registry of
Property by virtue of a judicial order,
attachment or execution – unlike the other
special preferred credits, these credits do
not share proportionately in the property
upon which they are imposed. Reason: to
allow the contrary would be absurd. The
preference of a credit annotated by an
attachment or execution could be defeated
by simply obtaining a writ of attachment or
execution, no matter how much later
(Manabat v. Laguna Federation of Facomas, Inc. G.R.
No. L-23888. March 18, 1967). To determine
the order of priority among several credits
of this kind, their dates should be the
basis. The 1st one to be registered will be
prioritized over the others.
2. Ordinary Preferred Credits – those listed in
Art. 2244 as amended by Art. 110 of the
Labor Code.
Effects of Art. 110 of Labor Code to Art 2244:
1. Removed the one-year limitation found in No.
2 of Art. 2244
2. Moving up the claims for unpaid wages (and
other monetary claims) of laborers or workers
of insolvent from second priority to first priority
in the order of preference established by Art.
2244
NOTES: In case of bankruptcy or liquidation of the
employer’s business, the unpaid wages and other
monetary claims of the employees shall be given
first preference and shall be paid in full before the
claims of the government and other creditors may
be paid. The terms, “declaration” of bankruptcy, or
“judicial” liquidation have been eliminated,
nevertheless, according to the SC, bankruptcy or
liquidation proceedings are still necessary for the
operation of the preference accorded to workers
under Art. 110 of the Labor Code (DBP v. NLRC 183
SCRA 328; RA No. 6715 Sec 10).
224
Credit Transactions
In case of rehabilitation, the preference of credit
granted to employees under Art. 110 of the
Labor Code is not applicable (Rubberworld [Phils.]
v. CA 305 SCRA 722).
NOTES: The provision not only enumerates
the preferred credits with respect to other
property, real and personal, of the debtor, but
also gives their order of preference “in the
order named”.
In contrast with Arts. 2241 and 2242, Art.
2244 creates no liens on determinate
property which follow such property. What
Art. 2244 creates are simply rights in favor
of certain creditors to have the cash and
other assets of the insolvent applied in a
certain sequence or order of priority.
Under Art. 2242 no. 14, the order of
preference is first, in favor of credits
evidenced by a final judgment (should they
have been the subject of litigation), and
secondly, in favor of credits evidenced by
a public instrument, the preference among
the two kinds of credits being determined
by priority of dates (Rizal Surety and Insurance
Co. v. Dela Paz, May 26, 1954, 50 O.G. No. 6,
2501; Credit Transactions by Rodriguez, 2002
Edition).
Article 2244, particularly par (14) item (a)
thereof, is not applicable to obligations of
the State as it is a recognized doctrine that
the State is always solvent. It is
inconceivable for the State to voluntarily
initiate insolvency or general liquidation
proceedings or to be subjected to such
proceedings under its own laws.
It should be noted that fixed, savings, and
current deposits of money in banks and
similar institutions are not true deposits.
They are considered simple loans and, as
such, are not preferred credits (Art. 1980,
Civil Code).
Thus, final judgments regarding the said deposits
maintained by depositors in the event that the
bank has been declared insolvent cannot be
considered preferred and that article 2244(14)(b).
$ Reason:
1. The available assets of such a bank are
held in trust, and so conserved that each
depositor or other creditor shall receive
payment or dividend according to the
amount of his debt, and that none of equal
class shall receive any advantage or
preference over another
2. To recognize such judgments as entitled to
priority would mean that depositors in
insolvent banks, after learning that the
bank is insolvent as shown by the fact that
it can no longer pay withdrawals or that it
has closed its doors or has been enjoined
by the Monetary Board from doing
MEMORY AID IN CIVIL LAW
business, would rush to the courts to
secure judgments for the payment of their
deposits. Less alert depositors would be
prejudiced. That inequitable situation could
not have been contemplated law (CB v.
Morfe. GR No. L-38427. March 12, 1975, March
12, 1975; Credit Transactions by Rodriguez).
3. Common Credits – If it is not among
those mentioned in 2241, 2242 and 2244,
it is a common credit. There is no order of
preference among common creditors; they
share whatever is left in proportion to their
credit, regardless of date.
NOTE: Ordinary Preferred and Common
Credits cover only “free property” of the
debtor, or those not subjected to Special
Preferred Credit.
REFECTIONARY CREDIT
Indebtedness incurred in the repair or
reconstruction of something previously made,
such repair or reconstruction being made
necessary by the deterioration or destruction of
the thing as it formerly existed
HOW TO APPLY THE RULES IN PREFERENCE AND
CONCURRENCE OF CREDITS:
STEP 1: Make an inventory of the debtor’s assets
$ Group these assets into 2: the
preferred group and the free property group
$ Those assets with special preferred
claims under 2241 and 2242 imposed upon
them belong to the preferred group; while
those w/o special preferred claims will
constitute the debtor’s free property.
STEP 2: Group the claims
$ Make 4 groups: (1) special preferred
credits on movable, (2) special preferred
credits on immovables, (3) ordinary preferred
credits and (4) common credits.
STEP 3: Satisfy the special preferred claims
$ Remember to always satisfy the taxes
on the property first, the rest of the special
preferred claims share equal preference
among themselves (Art. 2243).
$ If, after paying the taxes and other
special preferred claims, there is an excess,
take the value of the excess and add it to the
debtor’s free property.
STEP 4: Satisfy the ordinary preferred claims
$ List down all the ordinary preferred
claims in the order in which they are listed in
2244. This is the order of preference among
them.
$ Take note of the preferential effect of
Art. 110 of the Labor Code on Art. 2244
San Beda College of Law
$ Most probably, there will be several
credits in public instrument and final
judgments. Arrange these by date. Those
falling on the same date will enjoy equal
preference and will share the balance of the
free property proportionately.
! END OF CREDIT TRANSACTIONS
225
2008 CENTRALIZED BAR OPERATIONS
STEP 5: Satisfy the common claims
$ Whatever is remaining of the debtor’s
free property will be used to satisfy the
common claims
$ The common creditors will share the
balance in proportion to the amount of their
credit, regardless of the date
"
226 MEMORY AID IN CIVIL LAW
Torts & Damages

CIVIL LAW
TORTS AND DAMAGES
TORTS AND DAMAGES

Torts
Torts
An unlawful violation of private right, not created
by contract, and which gives rise to an action for
damages.
! Essentially, "tort" consists in the violation of a
right given or the omission of a duty imposed
Catch all Provisions
by law. Simply stated, tort is a breach of a
legal duty (Naguiat v. NLRC, G.R. No. 116123,
March 13, 1997).
! The act that breaks the contract may also be
a tort (Air France v. Carrascoso, L- 21438 Sept.
28,1996).
Classes of Torts:
A. Negligent Torts
Involves voluntary acts or omissions which
result in injury to others, without intending
to cause the same.
B. Intentional Torts
The actor desires to cause the
consequences of his act or believes the
consequences are substantially certain to
result therefrom.
C. Strict Liability
The person is made liable independent of
fault or negligence upon submission of
proof of certain facts.
Articles 19 to 21 of the NCC
bases of every imaginable tort action;
provides for general concepts that make a
person liable for every conceivable
wrongful act.
Article 2176
Article 2176 includes intentional torts
(Majority view)
Article 2176 is limited to negligence
(Minority View). Intentional and
malicious acts are to be governed by
the Revised Penal Code while negligent
acts or omissions are to be covered by
Article 2176 of the NCC

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
San Beda College of Law
Persons who can sue and be sued for tort
A. Plaintiffs: Persons who are entitled to
damages
Any person who had been injured by
reason of a tortuous conduct
May be a natural or artificial person
KINDS OF NEGLIGENCE
2. Culpa Aquiliana (quasi-delict) (Art. 2176,
NCC)
Requisites:
1. act or omission constituting fault or
negligence
2. damage caused by the said act or
omission
3. causal relation between the damage and
the act or omission
NOTE: An action based on quasi-delict can
be maintained even if there is an existing
contractual relation between the parties
Quasi-delict or "culpa aquiliana" is a separate
legal institution under the Civil Code,
entirely independent from a delict or crime.
A concurrence of scope in regard to
negligent acts does not destroy the
distinction between the civil liability arising
from a crime and the responsibility for
cuasi-delitos or culpa extra-contractual
(Barredo v. Garcia, GR No. L-48006, July 8, 1942).
Article 2176, where it refers to "fault or
negligence," covers not only acts "not
punishable by law" but also acts criminal in
character, whether intentional and
voluntary or negligent. Consequently, a
separate civil action lies against the
offender in a criminal act, whether or not
he is criminally prosecuted and found
guilty or acquitted, provided that the
offended party is not allowed, if he is
actually charged also criminally, to recover
damages on both scores (Dulay v. CA, G.R.
No. 108017, April 3, 1995).
The concept of quasi-delict as enunciated in
Article 2176 of the Civil Code (supra), is so
broad that it includes not only injuries to
persons but also damage to property. It
makes no distinction between "damage to
persons" and "damage to property” (Cinco v.
Canonoy, G.R. No. L-33171 May 31, 1979).
227
2008 CENTRALIZED BAR OPERATIONS
A defendant may be held liable even if he
does not know the identity of the
plaintiff at the time of the accident
An unborn child is not entitled to damages
(Geluz v. CA, G.R. No. L-15341 July 20, 1961)
B. Defendants: Persons who may be held
liable
Natural or artificial persons (e. g .
corporations, partnerships, the state)
Negligence
2. Culpa Criminal (criminal negligence) (Art. 365
of the RPC)
NOTE: While the guilt of the accused in a
criminal prosecution must be established
beyond reasonable doubt, only a
preponderance of evidence is required in a
civil action for damages. The judgment of
acquittal extinguishes the civil liability of the
accused only when it includes a declaration
that the facts from which the civil liability might
arise did not exist (People v. Ligon, G.R. No. 74041,
July 29, 1987).
Article 29 of the New Civil Code provides a
remedy for the plaintiff in case the
defendant has been acquitted in a criminal
prosecution on the ground that his guilt
has not been proved beyond reasonable
doubt. It merely emphasizes that a civil
action for damages is not precluded by an
acquittal for the same criminal act or
omission (Padilla v. CA, G.R. No. L-39999, May
31, 1984).
3. Culpa Contractual (contractual negligence)
(CC provisions on Obligations and Contracts, particularly
Arts. 1170 to 1174 of the Civil Code)
NOTE: The field of non- contractual obligation
is much broader than that of contractual
obligations, comprising, as it does, the whole
extent of juridical human relations. The mere
fact that a person is bound to another by
contract does not relieve him from extra-
contractual liability to such person. When
such a contractual relation exists the obligor
may break the contract under such conditions
that the same act which constitutes the
source of an extra-contractual obligation had
no contract existed between the parties (Cangco
v. Manila Railroad Co., G.R. No. 12191, October 14,
1918).
A corporation can act only through its
employees. To hold that a corporation is
not liable directly for the acts of its
employees in the pursuit of petitioner's
business is to deprive the general public
availing of the services of the petitioner of
an effective and adequate remedy. In most
cases, negligence must be proved in order
228 MEMORY AID IN CIVIL LAW
Torts & Damages

that plaintiff may recover (RCPI v. CA, G.R. corresponding to the circumstances of the
No. L-44748, August 29, 1986). persons, time and place (Art. 1173, NCC)
In culpa contractual, moral damages may be NOTES: The definition of negligence and the
recovered where the defendant is shown tests thereof as well as the standard of
to have acted in bad faith or with malice in conduct apply to obligations arising from
the breach of the contract. Exceptionally, contract (Art. 2178, NCC)
in contract of carriage, moral damages are
The same test and definition also apply to
also allowed in case of death of a
criminal negligence.
passenger attributable to the fault (which
is presumed) of the common carrier Tests of Negligence
(FEBTC v. CA, G.R. No. 108164, February 23,
1. Did the defendant in doing the alleged
1995).
negligent act use the reasonable care and
caution which an ordinarily prudent person
would have used in the same situation?
DISTINCTIONS
CULPA CONTRACTUAL AND CULPA AQUILIANA
• If not then he is guilty of negligence.
DISTINGUISHED 2. Could a prudent man, in the case under
consideration, foresee harm as a result of
Culpa Contractual Culpa Aquiliana the course pursued?
The foundation of the It is a separate • If so, it was the duty of the actor to
liability of the defendant is source of obligation take precautions to guard against
the contract independent of harm.
contract
• reasonable foresight of harm, followed
In breach of contract In quasi-delict the by the ignoring of the suggestion born
committed through the presumptive of this provision, is always necessary
negligence of employee, the responsibility for before negligence can be held to exist
employer cannot erase his the negligence of
primary and direct liability by his servants can be
invoking exercise of rebutted by proof of “DILIGENCE BEFORE THE FACT”
diligence of a good father of the exercise of due
a family in the selection and care in their The conduct that should be examined in
supervision of the selection and negligence cases is prior conduct, that is, conduct
employee. supervision. prior to the injury that resulted or in proper cases,
the aggravation thereof
CULPA AQUILIANA AND CRIME DISTINGUISHED NOTES: The state of mind of the actor is not
Culpa Aquiliana Crime important; good faith or use of sound judgment is
immaterial (Picart v. Smith, GR No. L-12219, March 15,
Only involves private Affect the public 1918).
concern interest
Negligence is conduct which creates an undue
The Civil Code by The Revised Penal risk of harm to others. It is the failure to
means of Code punishes or observe that degree of care, precaution, and
indemnification merely corrects criminal act vigilance which the circumstances justly
repairs the damage demand, whereby such other person suffers
Includes all acts in Punished only if there injury (Valenzuela v. CA, G.R. No. 115024 February 7,
which any kind of fault is a penal law clearly 1996).
or negligence intervenes covering them
An act may be negligent if it is done without the
Liability is direct and Liability of the employer competence that a reasonable person in the
primary in quasi-delict of the actor-employee position of the actor would recognize as
is subsidiary in crimes necessary to prevent it from creating an
unreasonable risk of harm to another (Far
Eastern v. CA, supra).
CONCURRENCE OF CAUSES OF ACTION
A single act or omission may give rise to two or
RISK
more causes of action. Thus, an act or omission
may give rise to an action based on delict, quasi- Danger which is apparent or should be
delict and contract. apparent to one in the position of the actor
PROBABILITY
NEGLIGENCE The existence of some real likelihood of some
damage and the likelihood is of such
The omission of that degree of diligence which is
appreciable weight reasonably to induce,
required by the nature of the obligation and
action to avoid it.
San Beda College of Law
Calculation of Risk
• Risk-Benefit Analysis - Balancing the risk, in
light of the social value of the interest
threatened and the probability and extent of
the harm against the value of the interest
which the actor is seeking to protect, and the
expedience of the course pursued (Dean Prosser)
Circumstances to be considered:
a. gravity of the harm to be avoided
b. utility of conduct or the social value it
seeks to advance
c. alternative course of action, dangers
and advantages to the person or
property of the actor himself and to
others
However, every case must be dependent
on its facts. The circumstances indicative of
lack of due care must be judged in the light of
what could reasonably be expected of the
parties. If the objective standard of prudence
be met, then negligence is ruled out (Corliss v.
Manila G.R. No. L-21291 March 28, 1969).
• Negligence Formula: liability (L) depends
upon whether burden (B) is less than L
multiplied by probability (P)
No formula is used in the Philippines to
determine if the defendant committed a
negligent act or omission. Negligence is a
relative or comparative concept. Its
application depends upon the situation the
parties are in and the degree of care and
vigilance which the prevailing circumstances
reasonably require (Bulilan v. COA, GR No.
130057, December 22, 1998)
Circumstances to Consider (PEST-GAP)
1. Time
2. Place
3. Emergency
The actor confronted with an emergency
is not to be held up to the standard of
conduct normally applied to an individual
who is in no such situation
EMERGENCY RULE
GENERAL RULE: An individual who
suddenly finds himself in a situation of
danger and is required to act without
much time to consider the best means
that may be adopted to avoid the
impending danger is not guilty of
negligence if he fails to undertake
what subsequently and upon reflection
may appear to be a better solution.
EXCEPTION: When the emergency was
brought by the individual’s own
negligence (Valenzuela v. CA, G.R. No.
115024 February 7, 1996).
229
2008 CENTRALIZED BAR OPERATIONS
4. Gravity of the Harm to be Avoided
Disregard of danger even if the odds that
harm will result are not great is
negligence
5. Alternative Courses of Action
If the alternative presented to the actor is
too costly, the harm that may result may
still be considered unforeseeable to a
reasonable man
6. Social Value or Utility of Action
The act which subjects an innocent
person to an unnecessary risk is a
negligent act if the risk outweighs the
advantage accruing to the actor and even
to the innocent person himself
7. Person Exposed to the Risk
A higher degree of diligence is required if
the person involved is a child
GOOD FATHER OF A FAMILY (PATER FAMILIAS)
The only standard of conduct used in the
Philippines. (Art. 1173, NCC)
A reasonable man is deemed to have knowledge
of the facts that a man should be expected to
know based on ordinary human experience
(PNR v IAC. GR No. 70547. January 22, 1993).
GENERAL RULE: the law requires a man to
possess ordinary capacity to avoid harming
his neighbors unless a clear and manifest
incapacity is shown and the law does not hold
him liable for unintentional injury unless,
possessing such capacity, he might and ought
to have foreseen the danger (Corliss v. Manila
Railroad Co., supra)
EXCEPTIONS:
1. when a man has a distinct defect of such
nature that he is incapable of making
certain precautions
2. the law works only within the sphere of
the senses. Moral considerations are not
normally accorded great weight.
! The knowledge and experience of the
actor is also considered in determining
whether he observed due diligence (Corliss
vs. Manila Railroad Co., supra)
SPECIAL RULES
1. Children
A minor should not be held to the same
degree of care as an adult, but his conduct
should be judged according to the average
conduct of persons of his age and experience.
The standard of conduct to which a child must
conform for his own protection is that degree
of care ordinarily exercised by children of the
230
Torts & Damages
same age, capacity, discretion, knowledge
and experience under the same or similar
circumstances (Ylarde v. Aquino. GR No. L-33722
July 29, 1988).
NOTES: The law fixes no arbitrary age at
which a minor can be said to have the
necessary capacity to understand and
appreciate the nature and consequence of his
acts (Taylor v. Meralco, 16 Phil 8).
Applying the provisions of the Revised Penal
Code, Judge Sangco takes the view that a
child who is 9 or below is conclusively
presumed to be incapable of negligence.
In the other hand, if the child is above 9
years but below 15, there is a disputable
presumption of absence of negligence.
Absence of negligence does not necessarily
mean absence of liability.
Liability without fault: a child under 9 years
can still be subsidiarily liable with his
property (Art. 100, RPC).
Absence of negligence of the child may not
excuse the parents from their vicarious
liability (Art. 2180 NCC or Art. 221 FC).
2. Physical Disability
GENERAL RULE: a weak or accident prone
person must come up to the standard of a
reasonable man, otherwise, he will be
considered as negligent
EXCEPTION: If the defect amounts to a real
disability, the standard of conduct is that of
a reasonable person under like disability.
3. Experts and professionals
When a person holds himself out as being
competent to do things requiring
professional skill, he will be held liable for
negligence if he fails to exhibit the care
and skill of one ordinarily skilled in the
particular work which he attempts to do
(Culion Ice, Fish & Electric Co v. Philippine Motors.
GR No. L-32611. November 3, 1930).
The rule regarding experts is applicable not
only to professionals who have undergone
formal education, but even those who
haven’t (Fernando v. CA. GR No. 92087. May 8,
1992).
4. Nature of activity
There are activities which by nature impose
duties to exercise a higher degree of
diligence.
Examples:
a. Banks, the degree of diligence required
is more than that of a good father of a
family considering that the business of
banking is imbued with public interest due
to the nature of their functions. Thus, the
law imposes on banks a high degree of
obligation to treat the accounts of its
MEMORY AID IN CIVIL LAW
depositors with meticulous care, always
having in mind the fiduciary nature of
banking (Phil. National Bank v. Pie, G.R. No.
157845, Sept. 20, 2005).
b. Common carriers are required to
exercise extraordinary diligence in the
vigilance over their passengers and
transported goods (Art. 1733 Civil Code).
Common carriers shall be presumed
to have been at fault or to have acted
negligently, unless it proves that it has
observed the extraordinary diligence
required by law.
5. Intoxication
GENERAL RULE: Mere intoxication is not
negligence nor establishes want of
ordinary care. But it may be one of the
circumstances to be considered to prove
negligence (Wright v. Manila Electric Railroad &
Light Co. GR No. L-7760. October 1, 1914).
EXCEPTIONS: Under Art. 2185 of the Civil
Code, it is presumed that a person driving
a motor vehicle has been negligent if at
the time of the mishap, he was violating
any traffic regulation.
6. Insanity
An insane person is exempt from liability.
However, by express provision of law,
there may be civil liability even when the
perpetrator is held to be exempt from
criminal liability
The insanity of a person does not excuse him
or his guardian from liability based on
quasi-delict (Arts. 2180 and 2182, NCC)
Every person liable criminally for a crime or
misdemeanor is also liable for reparation
of damage and for indemnification of the
harm done, but there may be civil liability
because of acts ordinarily punishable,
although the law has declared their
perpetrators exempt from criminal liability.
Such is the case of a lunatic or insane
person who, in spite of his irresponsibility
on account of the deplorable condition of
his deranged mind, is still reasonably and
justly liable with his property for the
consequences of his acts (US v. Baggay, Jr.
G.R. No. 6706. September 1, 1911).
7. Women
Valenzuela vs. CA 253 SCRA 303 appears to
require a different standard of care for
women under the circumstances indicated
therein.
However, Dean Guido Calabresi believes that
there should be a uniform standard
between men and women.
San Beda College of Law
Other Factors to Consider in Determining the
Presence of Negligence
A. Violation of Rules And Statutes
1. Statutes
GENERAL RULE: Violation of a statutory
duty is NEGLIGENCE PER SE.
(Cipriano v. CA. GR No. 107968. October 30,
1996) When the Legislature has
spoken, the standard of care required
is no longer what a reasonably
prudent man would do under the
circumstances but what the
Legislature has commanded.
EXCEPTIONS:
a. When unusual conditions occur and
strict observance may defeat the
purpose of the rule and may even
lead to adverse results.
b. When the statute expressly provides
that violation of a statutory duty
merely establishes a presumption of
negligence.
DOCTRINE: Even without applying the
doctrine of res ipsa loquitur,
petitioner's failure to construct a
firewall in accordance with city
ordinances would suffice to support a
finding of negligence. This had been
ruled by the Court as an act of
negligence (FF Cruz v. CA. GR No.
L-66478. August 29, 1988).
NOTE: Rule as to proof of proximate
cause
GENERAL RULE: Plaintiff must show
that the violation of the statute is
the proximate or legal cause of the
injury or that it substantially
contributed thereto (Sanitary Steam
Laundry v. CA. GR No. 119092. February
1, 1999).
EXCEPTION: In cases where the
damage to the plaintiff is the
damage sought to be prevented by
the statute. In such cases, proof of
violation of statute and damage to
the plaintiff may itself establish
proximate cause (Teague v. Fernandez.
GR No. L-29745. June 4, 1973).
2. Administrative Rule
Violation of a rule promulgated by
administrative agencies is not negligence
per se but may be EVIDENCE OF
NEGLIGENCE.
3. Private Rules of Conduct.
Violation of rules imposed by private
individuals (e.g. employers) is merely a
POSSIBLE EVIDENCE OF
NEGLIGENCE.
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B. Practice And Custom
The way of doing things in a particular
situation may in fact have ripened into
custom precisely because it is how a
reasonable man would act under the same
circumstances (Martinez v. Buskirk, 18 Phil. 79)
A practice which is dangerous to human life
cannot ripen into a custom which will
protect anyone who follows it (Yamada v.
Manila Railroad, supra).
C. Compliance With Statutes
Compliance with a statute is not conclusive
that there was no negligence.
Example: A defendant can still be held liable
for negligence even if he can establish that
he was driving below the speed limit.
Compliance with the speed limit is not
conclusive that he was not negligently
driving his car.
• Article 233, NCC: In quasi-delicts,
exemplary damages may be granted if
the defendant acted with gross
negligence.
• Gross Negligence – where there is want
of even slight care and diligence; implying
conscious indifference to consequences;
pursuing a course of conduct which would
naturally and probably result to injury, in
utter disregard of the consequences.
PROOF OF NEGLIGENCE
BURDEN OF PROOF (R.O.C Rule 131, Sec. 3)
a. That a person intends the ordinary
consequences of his voluntary act;
b. That a person takes ordinary care of his
concerns;
GENERAL RULE: If the plaintiff alleged in his
complaint that he was damaged because of
the negligent acts of the defendant, the
plaintiff has the burden of proving such
negligence (Taylor v. MERALCO, supra) with
preponderance of evidence.
EXCEPTIONS: Exceptional cases when the rules
or the law provides for cases when
negligence is presumed.
a. Presumptions of Negligence
b. Res Ipsa Loquitur
A. PRESUMPTIONS OF NEGLIGENCE
1. In motor vehicle mishaps, the owner is
presumed negligent if he was in the vehicle
and he could have used due diligence to
prevent the misfortune (Art. 2184 Civil Code).
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Torts & Damages
2. It is disputably presumed that a driver was
negligent if he had been found guilty of
reckless driving or violating traffic regulations
at least twice for the next preceding two
months (Art. 2184 Civil Code).
3. The driver of a motor vehicle is presumed
negligent if at the time of the mishap, he was
violating any traffic regulation (Art. 2185 Civil
Code).
4. GENERAL RULE: Prima facie presumption of
negligence of the defendant arises if
death or injury results from his
possession of dangerous weapons or
substance.
5. EXCEPTION: When such possession or use
is indispensable to his occupation or
business (Art. 2188 Civil Code).
6. GENERAL RULE: Presumption of negligence
of the common carrier arises in case of
loss, destruction or deterioration of the
goods, or in case of death or injury of
passengers.
7. EXCEPTION: Upon proof of exercise of
extraordinary diligence.
B. RES IPSA LOQUITUR
“The thing or transaction speaks for itself.”
• It is a rule of evidence peculiar to the law
of negligence
Requisites (Professional Services, Inc. v. Agana, GR No.
126297, January 31, 2007):
1. The occurrence of an injury;
Affirmative Duties and Miscellaneous Activities
DUTY TO RESCUE
DUTY TO THE RESCUER
The defendants are liable for the injuries to
persons who rescue people in distress
because of the acts or omissions of the
said defendants.
There is liability to the rescuer and the law
does not discriminate between the rescuer
oblivious to the peril and the one who
counts the costs.
One who was hurt trying to rescue another
who was injured through negligence may
recover damages (Santiago v. De leon. CA-GR
No.16180-R. March 21, 1960).
DUTY TO RESCUE
GENERAL RULE: There is no general duty to
rescue
MEMORY AID IN CIVIL LAW
2. The thing which caused the injury was
under the control and management of the
defendant;
3. The occurrence was such that in the
ordinary course of things, would not have
happened if those who had control or
management used proper care; and
4. The absence of explanation by the
defendant.
Elements:
a. the “apparatus” must be such that in
ordinary state of affairs no injury would
result unless from a careless construction,
inspection or user
b. both inspection and user must have been
at the time of the injury was under the
exclusive control of the person charged
with negligence
c. the injurious condition or occurrence must
not have been due to any voluntary action
on the part of the injured person.
NOTE: The doctrine of res ipsa loquitor is not
applicable if there is direct proof of absence or
presence of negligence (Martinez v. Buskirk, 18 Phil.
79 ).
The doctrine is not a rule of substantive law ,
hence, does NOT per se create or constitute an
independent or separate ground of liability. Mere
invocation and application of the doctrine does not
dispense with the requirement of proof of
negligence (Professional Services, Inc. v. Agana. GR No.
126297. January 31, 2007).
EXCEPTIONS: A limited duty to rescue is
imposed in certain cases:
1. Abandonment of persons in danger and
abandonment of one’s own victim is
considered, under certain circumstances
as a crime against security (Art. 275, RPC);
and
2. No driver of a motor vehicle concerned in
a vehicular accident shall leave the scene
of the accident without aiding the victim
unless he is excused from doing so (Sec. 55
RA 4136 [Land Transportation and Traffic Code])
3. In the case of individuals required by law
to take care of another person: Parents
with respect to their children or guardians
with respect to their wards.
San Beda College of Law
OWNERS, PROPRIETORS AND
POSSESSORS OF PROPERTY
The owner has the right to enjoy, dispose of
and recover his property (Art. 428, NCC).
NOTE: Damage to any person resulting from
the exercise of any rights of ownership is
damage without injury
GENERAL RULE: The owner has no duty to take
reasonable care towards a trespasser for his
protection or even to protect him from
concealed danger.
EXCEPTIONS:
a. Visitors and tolerated possession
Owners of buildings or premises owe duty
of care to visitors (Cabigao vs. UE).
b. Doctrine of Attractive Nuisance
The attractive nuisance doctrine generally
is not applicable to bodies of water,
artificial as well as natural, in the absence
of some unusual condition or artificial
feature other than the mere water and its
location.
c. State of Necessity (Art. 432)
Use of properties that injures another
An owner cannot use his property in such a
manner as to injure the rights of others (Art.
431, CC).
The exercise of the right of the owner may give
rise to an action based on quasi-delict if the
owner negligently exercises such right to
the prejudice of another.
Liability of Proprietors of buildings (Arts. 2190
and 2191)
Third persons who suffered damages may
proceed only against the engineer or
architect or contractor if the damage
referred to in Articles 2190 and 2191 should
be a result of any defect in construction.
Nevertheless, actions for damages can still be
maintained under Article 2176 for damages
EMPLOYEES
resulting from proprietor’s failure to
exercise due care in the maintenance of his
building and that he used his property in
such a way that he injured the property of
another.
EMPLOYERS AND EMPLOYEES
EMPLOYERS
Actions for quasi-delict can still be maintained
even if employee’s compensation is
provided for under the Labor Code.
In quasi-delictual actions against the employer,
the employee may use the provisions of the
Labor Code which imposes upon the
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2008 CENTRALIZED BAR OPERATIONS
employer certain duties with respect to the
proper maintenance of the work place or
the provisions of adequate facilities to
ensure the safety of the employees. Failure
on the part of the employer to comply with
said mandatory provisions may be
considered negligence per se.
Articles 1711 and 1712 of the Civil Code
impose liability without fault on the part of
the employers.
NOTE: Plaintiff must establish employer-
employee relationship and that the employee
was acting within the scope of his assigned
task when the tort complained of was
committed. It is only then that the employer
may find it necessary to interpose the defense
of due diligence in the selection and
supervision of the employee (Castilex v Vasquez.
G.R. No. 132266. December 21, 1999).
The clause "within the scope of their
assigned tasks" for purposes of raising
the presumption of liability of an employer,
includes any act done by an employee, in
furtherance of the interests of the employer
or for the account of the employer at the
time of the infliction of the injury or damage
(Filamer v IAC. G.R. No. 75112. August 17, 1992).
The premise for the employer’s liability is
negligence or fault on the part of the
employee. Once such fault is established,
the employer can then be made liable on
the basis of the presumption juris tantum
that the employer failed to exercise
diligentissimi patris families in the selection
and supervision of its employees (Light Rail
Transit v. Navidad. G.R. No. 145804. February 6,
2003).
The liability of the employer under Art. 2180 is
direct and immediate. It is not conditioned
on a prior recourse against the negligent
employee, or a prior showing of the latter’s
insolvency. It is also joint and solidary with
the employee (Mercury Drug v. Sps. Huang. GR
No. 172122. June 22, 2007).
Employees are bound to exercise due care in
the performance of their functions for the
employers. Liability may be based on
negligence committed while in the
performance of the duties of the employee
(Araneta v. De Joya. GR No. L-25172. May 24, 1974.
Ma-ao Sugar Central v. CA. GR No. 83491. August
27, 1990).
When an employee neglects to perform his
duties properly, to the damage of the firm of
which he was an officer, he is liable for a
tort. The fact that he was occupying a
contractual position in the company is of no
moment. The existence of a contract
between the parties constitutes no bar to
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Torts & Damages
the commission of a tort by one against the
other and the consequent recovery of
damages (Araneta v De Joya, supra).
BANKS
The business of banks is one affected by public
interest. Because of the nature of its functions, a
bank is under obligation to treat the accounts of its
depositors with meticulous care, always having
in mind the fiduciary nature of their relationship.
(PBC v. CA. GR No. 106858. September 5, 1997).
COMMON CARRIERS
They are bound to exercise extraordinary
diligence in the vigilance over the goods and
the safety of the passengers.
The duty to exercise extraordinary diligence is
owed to persons with whom they have
contractual relations: the passenger and the
shipper of the goods. The case cannot be
defeated by proof of exercise of due diligence
in the selection and supervision of employees.
The case against the common carrier is for the
enforcement of an obligation arising from
breach of contract.
The same act which breached the contract may
give rise to an action based on quasi delict (Air
France v. Carrascoso. L21438, September 28, 1996).
DOCTORS
STANDARD OF CARE
Depends on the circumstances:
If a general practitioner, whether he has
exercised the degree of care and skill of
the average qualified practitioner, taking
into account the advances in the
profession.
If a specialist, he should be held to the
standard of care and skill of the average
member of the profession practicing the
specialty, taking into account the advances
in the profession.
It is also permissible to consider the resources
available to the general practitioner and the
specialist as one of the circumstances in
determining the degree of skill and care required.
THE CAPTAIN OF THE SHIP DOCTRINE
The head surgeon is made liable for everything
that goes wrong within the four corners of the
operating room.
MEMORY AID IN CIVIL LAW
NOT WARRANTORS
Physicians are not warrantors of cures or insurers
against personal injuries or death of the patient.
They are not responsible for a mistake in
diagnosis if they use the proper degree of skill and
care (Chan Lugay v. St. Luke’s Hospita., 10 CA Reports 415
[1966]).
NOTES: MEDICAL MALPRACTICE OR NEGLIGENCE
Four Elements involved in medical negligence
cases: (DBIP)
1. Duty to use at least the same level of care
that any reasonably prudent doctor would
use to treat a condition under the same
circumstances
2. Breach of such professional duty or
improper performance thereof
3. Injury is caused to the patient, constituting
actionable malpractice
4. the doctor’s actions in fact caused the
harm to the patient or were the proximate
cause of the patient’s injury
Two pronged evidence:
a. Evidence as to the recognized standards
of the medical community in the particular
kind of case; and
b. A showing that the physician departed
from this standard in his treatment.
PROOF
Whether a physician or surgeon has exercised the
requisite degree of skill and care in the
treatment of his patient is, a matter of expert
opinion
1. Expert testimony should be offered to
prove that the circumstances a re
constitutive of conduct falling below the
standard of care employed by other
physicians in good standing when
performing the same operation.
2. Medical malpractice can also be
established by relying on the doctrine of
res ipsa loquitur. However, this is limited to
cases where the court, from its fund of
common knowledge, can determine the
standard of care or where an ordinary
layman can conclude that there was
negligence on the part of the doctor.
Example: The doctrine was applied in a
case of removal of the wrong part of the
body when another part was intended.
If a layman cannot or is not in a position to say if
due care has been exercised, expert testimony
is indispensable.
San Beda College of Law
L I A B I L I T Y O F H O S P I TA L S A N D
CONSULTANTS
There is no employer-employee relationship
between the hospital and a physician admitted
in the said hospital’s medical staff as an active
or visiting consultant which would hold the
hospital liable solidarily liable for the injury
suffered by a patient under Article 2180 of the
Civil Code (Ramos v. CA. GR No 124354. April 11,
2002).
The contract between the consultant and the
patient is separate and distinct the contract
between the hospital and the patient. The
first has for its object the rendition of medical
services by the consultant to the patient, while
the second concerns the provision by the
hospital of facilities and services by its staff
such as nurses and laboratory personnel
necessary for the proper treatment of the
patient (Ramos v. CA. GR No 124354. April 11, 2002)
In Manila Doctors Hospital v. So Un Chua, et al. G.R. No.
150355. July 31, 2006, The Supreme Court held
that for the sake of economic necessity and
Defenses in Negligence Cases
Kinds of defenses:
A. Complete – completely bars recovery
B. Partial – mitigates liability
PLAINTIFF’S CONDUCT AND
CONTRIBUTORY NEGLIGENCE
a. P l a i n t i ff ’s o w n n e g l i g e n c e a s t h e
proximate cause
he cannot recover damages (Art. 2179 Civil
Code).
b. Contributory negligence (Art. 2179 Civil Code)
Conduct on the part of the injured party
contributing as a legal cause to the harm
he has suffered which falls below the
standard to which he is required to
conform for his own protection (Valenzuela v.
CA. GR No. 115024. February 7, 1996).
Distinguished from Emergency Rule:
An actor who is confronted with an
emergency is not to be held up to the
standard of conduct normally applied to an
individual who is in no such situation
(Valenzuela v. CA. GR No. 115024. February 7,
1996).
• It is a partial defense.
• The contributory negligence of the child
and her mother, if any, does not operate
as a bar to recovery, but in its strictest
sense could only result in reduction of the
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2008 CENTRALIZED BAR OPERATIONS
survival, facilities which are non-essential for
the care of the patients (air-conditioner, tv set
and communication devices) may be lessened
by hospitals and such removal does not
warrant the award of tort damages.
Also held in Manila Doctors, a patient cannot be
detained in a hospital for non-payment of the
hospital bill. If the patient cannot pay the
hospital or physician's bill, the law provides a
remedy for them to pursue, that is, by filing the
necessary suit in court for the recovery of such
fee or bill. If the patient is prevented from
leaving the hospital for his inability to pay the
bill, any person who can act on his behalf can
apply in court for the issuance of writ of
habeas corpus.
LAWYERS
An attorney is bound to exercise only a
reasonable degree of care and skill, having
reference to the business he undertakes to do
(Adarne v. Aldaba. Adm. Case No. 801. June 27 1978).
damages (Bernal v. JV House. GR No. L-30741.
January 30, 1930).
DOCTRINE OF COMPARATIVE NEGLIGENCE
The relative degree of negligence of the
parties is considered in determining
whether and to what degree, either should
be responsible for his negligence
(apportionment of damages).
IMPUTED CONTRIBUTORY
NEGLIGENCE
Negligence is imputed if the actor is different from
the person who is being made liable.
The defendant will be subject to mitigated liability
even if the plaintiff was not himself personally
negligent but because the negligence of
another is imputed to the plaintiff.
It is applicable if the negligence was on the part of
the person for whom the plaintiff is responsible,
and especially, by negligence of an associate
in the transaction where he was injured.
FORTUITOUS EVENTS
A person is not liable if the cause of the damage
was fortuitous.
GENERAL RULE: It is a complete defense and a
person is not liable if the cause of the damage
is a fortuitous event.
EXCEPTION: It is merely a partial defense and
the courts may mitigate the damages if the
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Torts & Damages
loss would have resulted in any event (Art.
2215(4) Civil Code).
Essential requisites:
a. The cause of the unforeseen and
unexpected occurrence, or of the failure of
the debtor to comply with his obligation,
must be independent of the human will;
b. It must be impossible to foresee the event
which constitutes the “caso fortuito,” or if it
can be foreseen, it must be impossible to
avoid;
c. The occurrence must be such as to render
it impossible for the debtor to fulfill his
obligation in a normal manner; and
d. The obligor must be free from any
participation in the aggravation of the
injury resulting to the creditor.
NOTE: When an act of God concurs with the
negligence of defendant to produce an injury, the
defendant is liable if the injury would not have
resulted but for his own negligent conduct or
omission. The whole occurrence is humanized
and removed from the rules applicable to acts of
God (NAPOCOR v. CA GR. Nos. 103442-45. May 21,
1993)
ASSUMPTION OF RISK
The general principle underlying the defense of
assumption of risk is that plaintiff who
voluntarily assumes a risk of harm arising from
the negligent or reckless conduct of the
defendant cannot recover for such harm.
IT DOES NOT APPLY: where a person created a
danger and another person, with knowledge
and appreciation of its existence, voluntarily
assumes the risk of such danger but is not
injured by it even though he is injured in some
other way in attempting to withdraw from the
scene after the degree of danger increases.
• It is a complete defense.
KINDS:
A. Express waiver of the right to recover (Art.
6, NCC)
There is assumption of risk if the plaintiff, in
advance has expressly waived his right to
recover damages for the negligent act of the
defendant
NOTE: The waiver of the right to recover
before the negligent act was committed is
prohibited.
If waiver was made after the cause of
action accrued, the waiver is valid and may be
construed as a condonation of the obligation.
MEMORY AID IN CIVIL LAW
B. Implied Assumptions
a. Dangerous Conditions
A person who, knowing that he is
exposed to a dangerous condition
voluntarily assumes the risk of such
dangerous condition may not recover
from the defendant who maintained
such dangerous conditions.
Kinds of Dangerous Conditions:
1. Those that are inherently dangerous
2. Those where a person places a thing
which is not dangerous in itself in a
dangerous position.
3. Those involving products and other
things which are dangerous because
they are defective.
b. Contractual Relations
There may be implied assumption of risk
if the plaintiff entered into a contractual
relation with the defendant. EXAMPLES:
i. The employees assume the ordinary
risks inherent in the industry in which
he is employed.
• As to abnormal risks, there must
be cogent and convincing
evidence of consent.
ii. When a passenger boards a common
carrier, he takes the risks incidental
to the mode of travel he has taken.
c. Dangerous Activities
• Persons who voluntarily participate in
dangerous activities assume the risks
which are usually present in such
activities.
EXAMPLE: A professional athlete is
deemed to assume the risks of injury
to their trade.
d. Defendant’s negligence
• When the plaintiff is aware of the risk
created by the defendant’s negligence,
yet he voluntarily decided to proceed to
encounter it, there is an implied
admission.
EXAMPLE: If the plaintiff has been
supplied with a product which he
knows to be unsafe, he is deemed to
have assumed the risk of using such
unsafe product.
VOLENTI NON FIT INJURIA
One is not legally injured if he has consented
to the act complained of or was willing that it
should occur.
San Beda College of Law
Elements:
a. The plaintiff must know that the risk is
present;
b. He must further understand its nature; and
that
c. His choice to incur it is free and voluntary.
In relation to the last requisite, it has
been held that a plaintiff is excused from
the force of the rule if:
1. an emergency is found to exist
2. if the life or property of another is in
peril when he seeks to rescue his
endangered property (Ilocos Norte Electric
Co. v. CA, GR No. L-53401, November 6,
1989)
DAMNUM ABSQUE INJURIA
Injury - The illegal invasion of a legal right.
Damage - The loss, hurt, or harm which results
from the injury.
Damages - The recompense or compensation
awarded for the damage suffered.
• Thus, there can be damage without injury in
those instances in which the loss or harm was
not the result of a violation of a legal duty.
These situations are often called damnum
absque injuria (Custodio v. CA. G.R. No. 116100.
February 9, 1996).
DEATH OF THE DEFENDANT
Does not extinguish the obligation based on
quasi-delict.
An action survives even if the defendant dies
during the pendency of the case if the case is
an action to recover for an injury to persons or
property by reason of tort committed by the
deceased. The case will continue through the
legal representative who will substitute the
deceased.
It is no defense at all.
PROXIMATE CAUSE
That cause which in natural and continuous
sequence, unbroken by any efficient intervening
cause, produces the injury, without which the
result would not have occurred.
REMOTE CAUSE
That cause which some independent force merely
took advantage of to accomplish something not
the natural effect thereof.
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PRESCRIPTION
An action based on quasi-delict prescribes in four
years from the date of the accident (Art. 1146 Civil
Code), to be counted from the last element of the
commission of an act or omission violative of the
right of the plaintiff, which is the time when the
cause of action arises.
RELATIONS BACK DOCTRINE
An act done at one time is considered by fiction of
law to have been done at some antecedent
period (Allied Banking Corp v. CA. GR No. L-85868.
October 13, 1989)
EXAMPLE: A doctor negligently transfused blood
to a patient that was contaminated with HIV. If
the effect became apparent only after five (5)
years, the four (4) year prescriptive period
should commence only when it was
discovered.
The injury was discovered long after the
accident. In such case, the prescriptive period
should commence to run only upon discovery
of the injury.
DOUBLE RECOVERY
CC Art. 2177: Responsibility for fault or
negligence under the preceding article is entirely
separate and distinct from the civil liability arising
from negligence under the Penal Code. But the
plaintiff cannot recover damages twice for the
same act or omission of the defendant.
INVOLUNTARINESS
It is a complete defense in quasi-delict cases
(Aquino, Torts and Damages)
EXAMPLE: When the defendant was forced to
drive his vehicle by armed men. He was, at
pain of death, forced to drive at a very fast clip
because the armed men were escaping from
the policemen. The defendant cannot be held
liable, if a bystander is hit as a consequence.
Causation
NEAREST CAUSE
That cause which is the last link in the chain of
events; the nearest in point of time or relation.
• Proximate cause is not necessarily the
nearest cause
CONCURRENT CAUSES
Tortuous, criminal or negligent act of a third
person
• Where several causes producing the injury
are concurrent and each is an efficient cause
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Torts & Damages
without which the injury would not have
happened, the injury may be attributed to all
or any of the causes and recovery may be
had against any or all of the responsible
persons.
• Joint tortfeasors are solidarily liable and the
doctrine of last clear chance does not apply
NOTE: The actor is liable even if the active and
substantially simultaneous operation of the effects
of a third person’s innocent, tortuous or criminal
act is also a substantial factor in bringing about
the harm so long as the actor’s negligent conduct
actively and continuously operate to bring about
harm to another (Africa v. Caltex. G.R. No. L-12986.
March 31 1966).
Where the concurrent or successive negligent
acts or omissions of two or more persons,
although acting independently, are in
combination the direct and proximate cause of
a single injury to a third person, and it is
impossible to determine what proportion each
contributed to the injury, either of them is
responsible for the whole injury, even though
his act alone might not have caused the entire
injury; they become joint tort-feasors and are
solidarily liable for the resulting damage under
Article 2194 of the Civil Code (Sabido v. Custodio.
GR No. L-21512. August 31, 1966).
In case of an injury to a passenger due to the
negligence of the driver of the bus on which he
was riding and the driver of the other vehicle,
the drivers and owners of the two vehicles are
jointly and severally liable for damages (Viluan
v. CA. GR Nos. L-21477-81. April 29, 1966)
TESTS OF PROXIMATE CAUSE
TWO-PART TEST
a. CAUSE-IN-FACT TEST
b. POLICY TEST
NOTE: In determining the proximate cause of the
injury, it is first necessary to determine if the
defendant’s negligence was the cause-in-fact of
the damage to the plaintiff (Cause-in-fact test).
If the defendant’s negligence was not the cause-
in-fact, the inquiry stops.
If it is, the inquiry shifts to the question of limit of
the defendant’s liability as considerations of
public policy may be given due weight in fixing
the limits of legal liability (Policy test).
A.
CAUSE-IN-FACT TESTS
1. But-For/Sine Qua Non Test
The defendant’s conduct is the cause-in-fact if
damage would not have resulted had there
been no negligence on the part of the
defendant.
MEMORY AID IN CIVIL LAW
Not applicable in concurrent causes since one
would not be a cause-in-fact of another.
2. Substantial Factor test
The negligent conduct is the cause-in-fact of
the damage if it was a substantial factor in
producing the injuries.
In order to be a substantial factor in producing
the harm, the causes set in motion by the
defendant must continue until the moment
of the damage or at least down the setting
in motion of the final active injurious force
which immediately produced or preceded
the damage.
Important in determining cause-in-fact in
concurrent causes
3. NESS Test
The act or omission is a cause-in-fact if it is a
necessary element of a sufficient set
(NESS)
Used to solve problems regarding concurrent
causes
The candidate condition may still be termed
as a cause where it is shown to be a
necessary element in just one of several
co-present causal set each independently
sufficient for the effect.
Necessary condition – a circumstance in
whose absence the event cannot occur
Sufficient condition – a circumstance in whose
presence the event must occur
Two ways by which co-presence may manifest
itself:
a. Duplicative causation: When two or more
sets operate simultaneously to produce the
effect; the effect is over-determined.
b. Pre-emptive causation: When, though
coming about first in time, one causal set
trumps another potential set lurking in the
background; the causal potency of the latter is
frustrated.
MULTIPLE CAUSATION
If there are a number of candidate conditions,
which, taken one at a time, would not in fact have
been sufficient to cause the accident and the
accident was a cumulative effect of all the
candidate conditions.
B.
POLICY TEST
1. Foreseeability Test
2. Natural and Probable Consequence Test
3. Natural and Ordinary or Direct
Consequence Test
4. Hindsight Test
5. Orbit of Risk Test
San Beda College of Law
6. Substantial Factor Test
Policy Tests may be divided into Two Groups:
1. FORESIGHT PERSPECTIVE/
FORESEEABILITY TESTS
The defendant is not liable for the
unforeseeable consequences of his acts
Liability is limited within the risk created by
defendants’ negligent acts.
Includes the natural and probable
consequence test and hindsight test
2. DIRECT PERSPECTIVE/ DIRECT
CONSEQUENCES TESTS
The defendant is liable for damages which are
beyond the risk.
Direct consequences are those which follow
in sequence from the effect of defendants
act upon conditions existing and forces
already in operation at the time without
intervention of any external forces, which
come into active operation later.
Includes natural and direct consequence, orbit
of risk and substantial factor tests
EFFICIENT INTERVENING CAUSE
One which destroys the causal connection
between the negligent act and the injury and
thereby negatives liability (NOVUS ACTUS
INTERVIENS)
There is NO efficient intervening cause if the force
created by the negligent act or omission have
either:
1. Remained active itself, or
2. Created another force which remained
active until it directly caused the result, or
3. Created a new active risk of being acted
upon by the active force that caused the
result.
TEST OF SUFFICIENCY: It must be new and
independent and not under the control of the
wrongdoer; and it must break the continuity of
the causal connection between the original
negligent conduct and the injury
FORESEEABLE INTERVENING CAUSE
Cannot be considered as a sufficient intervening
cause because there is an opportunity to guard
against it
NOTES: If the intervening cause is a recurrent
feature of the environment, it is not an efficient
intervening cause because it is foreseeable
A tortfeasor is liable for the consequence of
negligence, mistake or lack of skill of a
physician or surgeon whose treatment
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2008 CENTRALIZED BAR OPERATIONS
aggravated the original injury. The same is
considered a normal and foreseeable risk.
The original tortfeasor is not liable where the
injured party failed to exercise reasonable care
in securing the services of a competent
surgeon or physician. Such can be considered
as an efficient intervening cause.
The intervention of an UNFORESEEN AND
UNEXPECTED CAUSE is not sufficient to
relieve the wrongdoer from consequences of
negligence if such negligence directly and
proximately cooperates with the independent
cause in the resulting injury.
An unforeseen and unexpected act of a
third person may not be considered an
efficient intervening cause if it is duplicative in
nature or if it merely aggravated the injury that
resulted because of the prior cause. The
same conclusion can be reached if the third
person’s act is part of the causal set, together
with the defendant’s negligence, that operated
to cause the injury.
CONTRIBUTORY NEGLIGENCE
Plaintiff’s negligence is the cause
EXAMPLES:
1. Only the plaintiff was negligent.
2. Defendant’s negligence is not a part of the
causal set which is a part of the causal
chain.
3. Plaintiff’s negligence was pre-emptive in
nature.
Compound Causes
Plaintiff’s negligence may have duplicative
effect, it is sufficient to bring about the
effect but his negligence occurs
simultaneously with the defendant; the
latter’s negligence is equally sufficient but
not necessary to bring about the effect
because damage would still have resulted
due to the negligence of the plaintiff.
Plaintiff’s negligence is not merely contributory
because it is a concurring proximate cause.
No recovery can be had (Aquino, Torts and
Damages).
Part of the same causal set
Neither plaintiff’s negligence nor defendant’s
negligence alone is sufficient to cause the
injury; the effect would result only if both
are present
In this situation, an apportionment should be
made and each of the candidate causes is
given a percentage of participation.
However, reduction of defendant’s liability
cannot be more than 50% since to do so is
no longer consistent with the finding that
240
Torts & Damages
the defendant’s negligence was the
proximate cause of the damage.
Defendant’s Negligence is the Only cause
Defendant’s negligence was sufficient AND
necessary to bring about the injury.
If plaintiff’s negligence increased or aggravated
the resulting damage or injury liability of the
defendant should also be mitigated under
contributory negligence rule or under the
doctrine of avoidable consequences.
DOCTRINE OF LAST CLEAR CHANCE OR DISCOVERED
PERIL OR DOCTRINE OF SUPERVENING NEGLIGENCE
OR HUMANITARIAN DOCTRINE
The negligence of the plaintiff does not
preclude a recovery for the negligence of the
defendant where it appears that the defendant,
by exercising reasonable care and prudence,
might have avoided injurious consequences to
the plaintiff notwithstanding the plaintiff’s
negligence.
Elements:
1. plaintiff by his own negligence placed
himself in a dangerous situation;
2. defendant saw or by the exercise of
reasonable care should have discovered
the perilous position of the plaintiff;
3. in time to avoid injuring him;
4. notwithstanding such notice and imminent
peril, the defendant negligently failed or
refused to use every reasonable means at
his command to avoid the impending injury
Intentional Torts: Human relations
PRINCIPLE OF ABUSE OF RIGHTS
(Art. 19)
(refer to discussions in persons)
ARTICLE 20 OF THE CIVIL CODE
Speaks of the general sanction for all other
provisions of law which do not especially provide
for their own sanction.
NOTE: Article 20 does not distinguish; the act
may be done willfully or negligently.
ACTS CONTRA BONUS MORES
(Art. 21 Civil Code)
Elements:
a. Act which is legal;
b. The act is contrary to morals, good
customs, public order or public policy; and
MEMORY AID IN CIVIL LAW
5. as a result of which plaintiff was in fact
injured.
Prevailing view
Doctrine is applicable in this jurisdiction.
Even if plaintiff was guilty of antecedent
negligence, the defendant is still liable
because he had the last clear chance of
avoiding the injury.
Cases when the doctrine was held inapplicable
(PICCA)
1. If the plaintiff was not negligent.
2. The party charged is required to act
instantaneously, and if the injury cannot be
avoided by the application of all the means
at hand after the peril is or should have
been discovered.
3. If defendant’s negligence is a concurrent
cause and which was still in operation up
to the time the injury was inflicted.
4. Where the plaintiff, a passenger, filed an
action against a carrier based on contract.
5. If the actor, though negligent, was not
aware of the danger or risk brought about
by the prior fraud or negligent act.
! The doctrine of last clear chance can never
apply where the party charged is required to
act instantaneously, and if the accident cannot
be avoided by the application of all means at
hand after the peril is or should have been
discovered (Pantranco North Express v. Baesa. GR No.
79050-51, November 14, 1989).
c. The act is done with intent to injure.
NOTE: Damages are recoverable even if no
positive law was violated.
Kinds: (BADD-STAMP)
A.
BREACH OF PROMISE TO MARRY
GENERAL RULE:: Breach of promise to marry by
itself is not actionable.
EXCEPTIONS: In cases where there is another
act independent of the breach of promise to
marry which gives rise to liability:
1. Cases where there was financial damage.
2. Social humiliation caused to one of the
parties.
3. Where there was moral seduction.
San Beda College of Law
4. if the breach was done in such a manner
that is clearly contrary to good morals
NOTES: Moral seduction, although not
punishable, connotes the idea of deceit,
enticement, superior power or abuse of
confidence on the part of the seducer to which the
woman has yielded (Baksh v. CA. GR No. 97336.
February 19, 1993).
Sexual intercourse is not by itself a basis for
recovery; damages could only be awarded if
the sexual intercourse is not a product of
voluntariness or mutual desire. (Constantino v.
Mendez. 209 SCRA 18).
For one whole year, the plaintiff, a woman of adult
age, maintained intimate sexual relations with
the appellant with repeated acts of intercourse.
There is here voluntariness and mutual
passion. Hence, no case is made under Article
21, NCC (Tanjanco v. CA, GR No. L-18630. December
17, 1966).
B.
SEDUCTION WITHOUT BREACH OF PROMISE
TO MARRY
Seduction, by itself, is also an act contrary to
morals, good customs and public policy.
The defendant is liable if he employed deceit,
enticement, superior power or abuse of
confidence (DESA) in successfully having
sexual intercourse with another even if he
satisfied his lust without promising to marry the
offended party.
It may not even matter that the plaintiff and the
defendant are of the same gender.
C.
SEXUAL ASSAULT
Defendant is liable for all forms of sexual assault
D.
DESERTION BY A SPOUSE
A spouse has a legal obligation to live with his/her
spouse. If a spouse does not perform his/her duty
to the other, he may be liable for damages for
such omission because the same is contrary to
law, morals, good customs and public policy.
E.
TRESPASS AND DEPRIVATION OF PROPERTY
KINDS:
1) Trespass to and/or deprivation of Real
Property
Liability for damages under the RPC and
Article 451 of the Civil Code requires intent
or bad faith.
Article 448 of the Civil Code in relation to
Article 456 does not permit action for
damages where the builder, planter, or
sower acted in good faith. The landowner
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is limited to the options given to him under
Article 448 (Aquino, Torts and Damages)
A builder in good faith who acted negligently
may be held liable under Art. 2176 NCC.
2) Trespass to or deprivation of Personal
Property
In the field of tort, trespass extends to all
cases where a person is deprived of his
personal property even in the absence of
criminal liability.
EXAMPLES: theft, robbery
NOTE: It may cover cases where the
defendant was deprived of personal property
for the purpose of obtaining possession of
real property
EXAMPLE: The defendant who was
landlord, was held liable because he
deprived the plaintiffs, his tenants, of water
in order to force them to vacate the lot
they were cultivating (Magbanua v. IAC. 137
SCRA).
F.
ABORTION AND WRONGFUL DEATH
Damages may be recovered by both spouses if:
1) the abortion was caused through the
physician’s negligence, or
2) was done intentionally without their
consent
A doctor who performs an illegal
abortion is criminally liable under Article
259, RPC.
Husband of a woman who voluntarily procured her
abortion may recover damages from the physician
who caused the same on account of distress and
mental anguish attendant to the loss of the unborn
child and the disappointment of his parental
expectation (Geluz v. CA, GR No. L-16439. July 20,
1961).
G.
DISCONNECTION OF UTILITIES
In the case a person fails to pay 1 of 2 overdue
bills. Consequently, his line gets disconnected
without prior notice. The Supreme Court ruled
that: The state may regulate, as it has done
through Section 97 of the Revised Order No. 1 of
the Public Service Commission, the conditions
under which and the manner by which a public
utility such as MERALCO may effect a
disconnection of service to a delinquent customer.
Among others, a prior written notice to the
customer is required before disconnection of the
service. Failure to give such prior notice amounts
to a tort (Meralco v. CA, GR No. L-39019. January 22,
1988).
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Torts & Damages
H.
ILLEGAL DISMISSAL
The right of the employer to dismiss an employee
should not be confused with the manner in
which the right is exercised and the effects
flowing therefrom
If the dismissal was done anti-socially and
oppressively, the employer should be deemed
to have violated Article 1701 of the Civil Code
(which prohibits acts of oppression by either
capital or labor against the other) and Article
21 NCC.
An employer may be held liable for damages if the
manner of dismissing is contrary to morals
good customs and public policy.
I.
MALICIOUS PROSECUTION (Arts. 19-21, 2, 32, 33,
35, 2217, 2219 (8), NCC)
An action for damages brought by one against
another whom a criminal prosecution, civil suit,
or other legal proceeding has been instituted
maliciously and without probable cause, after
the termination of such prosecution, suit or
proceeding in favor of the defendant therein.
The action which is terminated should be one
begun in malice, without probable cause to
believe that the charges can be sustained
Stripped of legal jargon, it means persecution
through the misuse or abuse of judicial
processes; or the institution or pursuit of legal
proceedings for the purpose of harassing,
annoying, vexing or injuring an innocent
person (Villanueva v. United Coconut Planters Bank.
GR.No. 138291. March 7, 2000).
Torts Against Human Dignity (Art. 26, NCC)
The following acts, though they may not constitute
a criminal offense, shall produce a cause of action
for damages, prevention and other relief: (VIMP)
a. Prying into the privacy of another’s residence
b. Meddling with or disturbing the private life or
family relations of another
c. Intriguing to cause another to be alienated
from his friends
d. Vexing of humiliating another on account of
his religious beliefs, lowly station in life, place
of birth, physical defect or other personal
condition
TYPES:
1. VIOLATION OF THE RIGHT OF PRIVACY
2. INTERFERENCE WITH FAMILY AND OTHER
RELATIONS
MEMORY AID IN CIVIL LAW
Elements:
1. The fact of the prosecution and the further
fact that the defendant was himself the
prosecutor; and that the action was finally
terminated with an acquittal;
2. That in bringing the action, the prosecutor
acted without probable cause;
3. The prosecutor was actuated or impelled
by legal malice.
NOTES: Presence of probable cause signifies
absence of malice.
Absence of malice signifies good faith on the part
of the defendant; good faith may even be
based on mistake of law.
Acquittal presupposes that a criminal information
is filed in court and final judgment rendered
dismissing the case; nevertheless, prior
acquittal may include dismissal by the
prosecutor after preliminary investigation (Globe
Mackay and Radio Corp. v. CA. GR. No. 81262. August
25, 1989; Manila Gas Corp v. CA. GR. No. L-44190.
October 30,1980).
J.
PUBLIC HUMILIATION
Such acts also constitutes an offense under Article
359, RPC (slander by deed)
EXAMPLES: The defendant was held liable for
damages under Art. 21 for slapping the plaintiff
(a priest) in public (Patricio v. Hon. Oscar Leviste. GR
No. L-51832. April 26, 1989)).
Under Articles 19 and 21, the defendant
may likewise be guilty of a tort even if he
acted in good faith (Grand Union Supermarket v.
Espino, GR No. L-48250. December 28, 1979).
3. INTRIGUING TO CAUSE ALIENATION
4. VEXATION AND HUMILIATION
VIOLATION OF THE RIGHT OF PRIVACY
Privacy – the right to be let alone (Ople v. Torres.GR
No. 127685. July 23, 1998).
Reasonableness of a person’s expectation of
privacy depends on a two-part test:
a) Whether by his conduct, the individual has
exhibited an expectation of privacy.
b) Whether this expectation is one that the
society recognizes as reasonable.
Basis of Liability for damages: Article 32, NCC
• GENERAL RULE: Right to privacy can be
invoked only by natural persons; Juridical
San Beda College of Law
persons cannot invoke such right because
the entire basis of right to privacy is an
injury to the feelings and sensibilities of a
party, a corporation would have no such
ground.
EXCEPTIONS: Right against unreasonable
searches and seizure can be invoked by a
juridical entity.
• GENERAL RULE: Right to privacy is purely
personal in nature, hence:
1. It can be invoked only by the person
whose privacy is claimed to have
been violated.
2. It can be subject to waiver of the
person whose privacy is sought to be
intruded into.
3. The right ceases upon the death of
the person.
EXCEPTION: A privilege may be given to the
surviving relatives of a deceased person to
protect his memory but the privilege exist
for the benefit of the living, to protect their
feelings and to prevent the violation of
their own rights in the character and
memory of the deceased.
Four Types of Invasion of Privacy (PIFA)
a. INTRUSION UPON PLAINTIFF’S
SECLUSION OR SOLITUDE OR INTO HIS
PRIVATE AFFAIR
b. P U B L I C AT I O N O F E M B A R R A S S I N G
PRIVATE FACTS
c. PUBLICITY WHICH PLACES A PERSON IN
A FALSE LIGHT IN THE PUBLIC EYE
d. C O M M E R C I A L A P P R O P R I AT I O N O F
LIKENESS
INTRUSION UPON PLAINTIFF’S SECLUSION
OR SOLITUDE OR INTO HIS PRIVATE AFFAIRS
It is not limited to cases where the defendant
physically trespassed into another’s property. It
includes cases when the defendant invades
one’s privacy by looking from outside
(Example: “peeping-tom”).
GENERAL RULE: There is no invasion of right
to privacy when a journalist records
photographs or writes about something that
occurs in public places.
EXCEPTION: When the acts of the journalist
should be to such extent that it constitutes
harassment or overzealous shadowing.
There is no intrusion when an employer
investigates an employee or when the school
investigates its student.
RA 4200 makes it illegal for any person not
authorized by all the parties to any private
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2008 CENTRALIZED BAR OPERATIONS
communication to secretly record such
communication by means of a tape recorder
(Ramirez v. CA. GR No. 93833. Sept. 28, 1995).
Use of a telephone extension for purposes of
overhearing a private conversation without
authorization does not violate RA 4200.
There is no intrusion into the privacy of another if
the information sought are matters of public
record (right to information). This includes
matters involving public officers but only when
the matter is of public concern and not one
which relates to his being a private citizen.
The right to information is not absolute. It is
subject to (1) public interest and (2) must not
be excluded by law.
In a contract of carriage, a passenger is entitled to
privacy and cannot be subjected to any
unusual search. Inquiry may only be made
verbally as to the nature of his baggage.
There is intrusion if access is not in favor of the
individual or entity having the legal right to
possess or use the plaintext, electronic
signature or file (e.g. hacking/cracking).
PUBLICATION OF EMBARRASSING PRIVATE
FACTS
Requisites:
1. Publicity is given to any private or purely
personal information about a person;
2. Without the latter’s consent; and
3. Regardless of whether or not such publicity
constitutes a criminal offense, like libel or
defamation, the circumstance that the
publication was made with intent of gain or for
commercial and business purposes invariably
serves to aggravate the violation of the right.
NOTE: Public figures, most especially those
holding responsible positions in government enjoy
a more limited right to privacy compared to
ordinary individuals.
The interest sought to be protected is the right to
be free from unwarranted publicity, from the
wrongful publicizing of the private affairs and
activities of an individual which are outside the
realm of legitimate public concern.
The publication of facts derived from the records
of official proceedings which are not otherwise
declared by law as confidential, cannot be
considered a tortuous conduct.
PUBLICITY WHICH PLACES A PERSON IN A
FALSE LIGHT IN THE PUBLIC EYE
EXAMPLE:
Defendant was held liable for damages when he
published an unauthorized biography of a
famous baseball player exaggerating his feats
244 MEMORY AID IN CIVIL LAW
Torts & Damages

on the baseball field, portraying him as a war
hero.
If the publicity given to the plaintiff is defamatory,
hence an action for libel is also warranted; the
action for invasion of privacy will afford an
alternative remedy.
film. The privilege may be given to the heirs
but exists for the benefit of the living to protect
their feelings and prevent violation of their own
rights in the character and memory of the
deceased (Lagunzad v. Gonzales. GR No. L-32066.
August 6, 1979).

INTERFERENCE WITH FAMILY AND

Tort of Putting Another OTHER RELATIONS
Defamation
in False Light
The gist of the tort is an interference with one
1. As to gravamen of claim spouse’s mental attitude toward the other and
The gravamen of claim is The gravamen of the conjugal kindness of marital relations
not the reputational harm claim is the resulting in some actual conduct which
but rather the reputational harm materially affects it.
embarrassment of a
It extends to all cases of wrongful interference in
person being made into
the family affairs of others
some-thing he is not
If the interference is by the parents of the spouse,
2. As to publication
malice must be proven.
The statement should be Publication is
actually made in public satisfied if a letter is Alienation of affection
sent to a third person depriving one spouse of the affection, society,
3. As to the defamatory character of the companionship and comfort of the other
statements
Defendant may still be What is published INTRIGUING TO CAUSE ALIENATION
held liable even if the lowers the esteem in
statements tells something which the plaintiff is
good about the plaintiff held VEXATION AND HUMILIATION
Discrimination against a person on account of his
physical defect, which causes emotional
COMMERCIAL APPROPRIATION OF LIKENESS
distress, may result in liability on the part of the
The unwarranted publication of a person’s name offending party.
or the unauthorized use of his photograph or
Article 135, Labor Code – Discrimination against
likeness for commercial purposes is an
women in the workforce
invasion of privacy.
RA 7277 – Discrimination of disabled persons
A person is entitled to enter into a licensing
agreement so that his life can be depicted on

Torts with Independent Civil Actions

(Arts. 32, 33 and 34, NCC)
Independent civil actions include: (VD-FIN) action is independent of the result of the
criminal action
1. VIOLATION OF CIVIL AND POLITICAL
RIGHTS 2. Caguioa – independent civil actions do not
pertain to the civil liability arising from the
2. DEFAMATION
crime. This is the better view.
3. FRAUD
Article 135, Labor Code and RA 7877 (Sexual
4. PHYSICAL INJURIES Harassment) provide for independent action for
5. NEGLECT OF DUTY BY PUBLIC OFFICERS discrimination

Basis of liability: (2 views) VIOLATION OF CIVIL AND POLITICAL RIGHTS

1. Tolentino – a civil action may be filed
independently of the criminal action even if
there has been no reservation made by
the injured party. The result of the civil
(Art. 32)
Although the same normally involves intentional
acts, it can also be committed through
negligence. It does not require malice or bad
faith.
San Beda College of Law
Persons liable:
a. public officers or employees;
b. private individuals
A superior officer may be held liable for the
violation committed by his subordinates.
Public officer who is a defendant cannot escape
liability under the doctrine of state immunity
since officers do not act within the ambit of
their powers if they violate the constitutional
rights of persons.
Suspension of the writ of habeas corpus cannot
be used as a defense in cases involving Article
32, NCC.
DEFAMATION
Defamation is an invasion of the interest in
reputation and good name, by communication
to others which tends to diminish the esteem in
which the plaintiff is held, or to excite adverse
feelings or opinion against him.
Includes the crime of libel (written defamation) and
slander (oral defamation).
Requisites for one to be liable for defamatory
imputations: (DIMP)
a. It must be defamatory
b. It must be malicious
c. It must be given publicity
d. The victim must be identifiable
NOTES: GROUP LIBEL
libel directed against a fairly large group; there
is actionable defamation only if the libel can
be said to reach beyond the mere
collectivity to do damage to an individual
group member’s reputation. It is essential
that the statement be so sweeping and all-
embracing as to apply to every individual in
that group or class so that he can bring the
action separately if necessary (Newsweek v.
IAC. GR No L-63559. May 30, 1986).
Test in determining the defamatory character
of the imputation: A charge is sufficient if
the words are calculated to induce the
hearers to suppose and understand that
the person/s against whom they were
uttered were guilty of a certain offense, or
are sufficient to impeach their honesty,
virtue, or reputation, or to hold the person/s
up to public ridicule.
The judge must put himself in the shoes of the
average reader and decide whether such
reader would interpret the message as
libelous.
Dissemination to a number of persons is not
required; communication to a single
individual is sufficient publication.
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2008 CENTRALIZED BAR OPERATIONS
No liability will result if the defamatory matter is
not seen or heard by anyone except the
defendant and plaintiff
GENERAL RULE: Every defamatory imputation is
presumed to be malicious, even if it be true, if
no good intention or justifiable motive for
making it is shown.
EXCEPTIONS:
1. A private communication made by any
person to another in the performance of
any legal, moral or social duty; and
2. A fair and true report, made in good faith,
without any comments or remarks, of any
judicial, legislative or other official
proceedings which are not of confidential
nature, or of any statement, report, or
speech delivered in said proceedings or of
any other act performed by public officers
in the exercise of their functions.
• The plaintiff must establish that the
defamatory statement referred to him
although it is not necessary that he be
named
• It is not sufficient that the offended party
recognized himself as the person attacked
or defamed, it must be shown that at least
a third person could identify him as the
object of the libelous publication.
• The relatives of the deceased can file an
action for damage to the reputation of the
latter
• In order to escape liability, the defendant
may claim that the statements made are
privileged.
Two kinds of privileged communication:
1) Absolutely privileged –not actionable even if
the author acted in bad faith.
2) Qualifiedly privileged – not actionable
unless found to have been made without good
intention or justifiable motive.
• The test to be applied is the test of good
faith. Even if the statement is untrue, the
same may not be considered defamatory
under the said test.
NOTE: Honest criticism on the conduct of public
officials and public figures are insulated from libel
judgments. Fair commentaries on matters of
public interest are privileged and constitute a valid
defense in an action for libel or slander.
FRAUD
Elements of deceit
1) The defendant must have made false
representation, through written or spoken
words or conduct, to the plaintiff
2) The representation must be one of fact
246
Torts & Damages
3) The defendant must know that the
representation is false or be reckless
about whether it is false
4) The defendant must have acted on the
false representation
5) The defendant must have intended that
the false representation should be acted
on
6) The plaintiff must have suffered damage
as a result of acting on the false
representation
• Half-truths are likewise included; it is
actionable if the withholding of that which is
not stated makes that which is stated
absolutely false.
• Misrepresentation upon a mere matter of
opinion is not an actionable deceit.
• The cases of fraud covered by Article 33,
NCC include estafa under the RPC
Civil Liability Arising from Delict (Art. 100 RPC)
Dual character of crimes applies to cases
governed by special laws. Example: violation
of the BP 22 results in criminal and civil liability.
Not all offenses give rise to civil liability such as
violation of ordinances, gain laws, and traffic
rules when no one is hurt. Treason, rebellion,
espionage, contempt and other similar crimes
for not result in civil liability.
Criminal liability will give rise to civil liability only if
the same felonious act or omission results in
damage or injury to another and is the direct
and proximate cause thereof.
The presence of civil liability in offenses is not
determined by the fact that the crime is public
or private. There is civil liability even if the
offense is a public one.
Persons liable are the principal, accomplice and
accessories (See Article 108, 109 and 110, RPC).
It includes restitution, reparation of damages and
indemnification of consequential damages (Art.
100, RPC).
The rule on proximate cause in quasi-delict cases
is applicable to cases involving civil liability
arising from delict (Art. 2202, NCC).
Circumstances Affecting Civil Liability
1. Justifying circumstances
2. Exempting Circumstances
MEMORY AID IN CIVIL LAW
PHYSICAL INJURIES
Battery – an intentional infliction of a harmful or
offensive bodily contact; bodily contact is
offensive if it offends a reasonable person’s
sense of dignity. It is offensive even though it is
intended only as a joke or a compliment.
Assault – intentional conduct by one person
directed at another which places the latter in
apprehension of immediate bodily harm or
offensive act.
Includes bodily injuries causing death.
Physical injuries which resulted because of
negligence or imprudence is not included in
Article 33; they are already covered by Article
2176 of the Civil Code.
NEGLECT OF DUTY BY POLICE OFFICERS
(Art. 34)
Subsidiary liability of cities and municipalities, is
imposed so that they will exercise great care in
selecting conscientious and duly qualified
policemen and exercise supervision over them in
the performance of their duties.
They do not erase civil liability (Art. 101,
RPC).
3. Mitigating and Aggravating
Circumstances
No exemplary damages may be awarded
if no aggravating circumstance is present
Extinction and Survival of liability
Civil liability under the RPC shall be
extinguished in the same manner as
obligations in accordance with civil law (Art.
1231, NCC; Article 113, RPC)
Effect of Death
A. D e a t h A F T E R F i n a l J u d g m e n t :
extinguishes criminal liability of the person
liable but will not extinguish the civil
liability.
B. Death BEFORE Final Judgment:
GENERAL RULE: The defendant is
relieved from both criminal and civil
liability arising from criminal liability.
EXCEPTIONS: In case of libel and
physical injuries wherein the plaintiff
initially opted to claim damages in the
criminal proceeding can file another
case under Article 33 of the Civil Code.
Effect of Pardon
Pardon does not erase civil liability.
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2008 CENTRALIZED BAR OPERATIONS

While pardon removes the existence of guilt so never committed the offense, it does not
that in the eyes of the law the offender is operate to remove all the effects of the
deemed innocent and treated as though he previous conviction.

Defendants in Tort Cases

CONCURRENT NEGLIGENCE OR ACTS diligence in the selection or supervision of
the employee
1. Joint Tort-feasors
2) Parents are made liable because they
All the persons who command, instigate,
failed to exercise due diligence
promote, encourage, advice, countenance,
cooperate in, aid, or abet the commission EXCEPTIONS: Doctrine of respondeat superior is
of a tort, or who approve of it after it is applicable in:
done, if done for their benefit; they are
1. liability of employers under Article 103 of
each liable as a principal, to the same
the RPC
extent and in the same manner as if they
have performed the wrongful act 2. liability of a partnership for the tort
themselves. committed by a partner
The responsibility of two or more persons
liable for quasi-delict is solidary (Art. 2194 PERSONS VICARIOUSLY LIABLE (Art. 2180 of the
Civil Code); Civil Code):
2. Motor vehicle mishaps 1. The Father, or in case of death or
The owner is solidarily liable with the driver, if incapacity, the mother
the former, who was in the vehicle, could For damage caused by:
have, by the use of due diligence,
prevented the misfortune (Art. 2184 Civil a) minor children
Code). b) living in their company
Solidary liability is imposed on the owner This has already been modified by Art. 221
because his own omission is a concurring of the Family Code to the extent that
proximate cause of the injury. the alternative qualification of the
liability of the father and the mother has
been removed.
VICARIOUS LIABILITY OR DOCTRINE OF IMPUTED
NEGLIGENCE Liability is primary
A person is not only liable for torts committed by Persons liable for the acts of minors:
himself, but also for torts committed by others with a. Parents
whom he has a certain relation or for whom he is
responsible (Art. 2180 Civil Code). b. Those exercising parental authority other
than parents
• Exercise of diligence of a good father of a
family to prevent damage is a defense. i. Adopters
ii. Guardians

DOCTRINE OF RESPONDEAT SUPERIOR – the liability c. Those exercising substitute parental

is strictly imputed, the employer is liable not authority
because of his act or omission but because of i. Surviving grandparents
the act or omission of the employee; employer
cannot escape liability by claiming that he ii. Oldest sibling, over 21 years old
exercised due diligence in the selection or unless unfit or disqualified
supervision of the employee. iii. Child’s actual custodian, over 21
GENERAL RULE: Vicarious liability in the years old unless unfit or disqualified
Philippines is not governed by the doctrine of d. Those exercising special parental
respondeat superior; employers or parents are authority
made liable not only because of the negligent
i. School
or wrongful act of the person for whom they
are responsible but also because of their own ii. Administrators
negligence:
iii. Teachers
1) Liability is imposed on the employer
because he failed to exercise due
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Torts & Damages
iv. Individual, entity or institution
engaged in child care
NOTES: The basis of liability for the acts or
omissions of their minor children is the
parental authority that they exercise over
them
The same foreseeability test of negligence
should apply to parents when they are
sought to be held liable under Art. 2180,
NCC
The liability is also imposed on those
exercising substitute and special parental
authority, i.e., guardian.
The liability is present both under Art 2180 of
the NCC and Art 221 of the Family Code if
the child is living in his parents’ company.
Parental authority is not the sole basis of
liability. A teacher in charge is still liable for
the acts of their students even if the minor
student reaches the age of majority.
The parents or guardians can still be held
liable even if the minor is already
emancipated provided that he is below 21
years of age.
Parents and other persons exercising parental
authority can escape liability by proving
that they observed the diligence of a good
father of a family to prevent damages (Art.
2180).
The burden of proof rests on the parents and
persons exercising parental authority.
2. Guardians
They are liable for damages caused by (Art.
2180, NCC):
a. minors or incapacitated persons
b. under their legal authority over the person
of the ward
c. living in their company
3. Owners and managers of establishments
For damage caused by:
a) their employees
b) in the service of the branches in which
they are employed, or
c) on the occasion of their functions
4. Employers
For damages caused by:
a) employees and household helpers
b) acting within the scope of their
assigned tasks
c) even if the employer is not engaged in
any business or industry
MEMORY AID IN CIVIL LAW
Requisites of vicarious liability under
Article 103, RPC:
a) employer is engaged in any kind of
industry
b) employee was convicted if the offense
committed in the discharge of his
duties
c) employee is insolvent
Before the employer’s subsidiary liability may
be proceeded against, it is imperative that
there is a criminal action whereby the
employee’s criminal negligence or delict
and corresponding liability is proved. It is a
condition sine qua non. The defense of
due diligence is not even available.
Subsidiary liability of the employer is limited to
those in which the employee committed
the offense in the discharge of his duties.
The employer’s property is not to be
seized without first exhausting that of the
servant.
NOTES: Liability of the employer can be
established by proving the existence of an
employer-employee relationship with the actor
and the latter caused the injury while
performing his assigned task or functions.
The vicarious liability attaches only when the
tortuous conduct of the employees relates
to or is in the course of his employment.
A minor deviation from the assigned task of
an employee, however does not affect the
liability of an employer (Valenzuela vs.
CA.G.R. No. 115024. February 7, 1996).
It is a defense that the employer exercised
proper diligence in the selection and
supervision of negligent employee.
5. State
For damage caused by:
a) a special agent
b) not when the damage has been
caused by the official to whom the
task done properly pertains
Public officers who are guilty of tortuous
conduct are personally liable for their actions.
6. Schools, Teachers and Administrators
For damage caused by:
a) pupils and students or apprentices
b) in their custody
Statutory basis:
• if student is minor – Art. 219, FC
• if student is no longer a minor – Art.
2180, Civil Code
NOTES: Applies also to teachers of academic
institutions.
San Beda College of Law
An academic institution, however, may be
held liable for tort even if it has an existing
contract with its students since the act that
violated the contract may also be a tort
(Regino v. Pangasinan Colleges of Science and
Technology. GR. No. 156109. November 18, 2004).
Liability attaches to the teacher-in-charge.
The school itself is now solidarily liable with
the teacher-in-charge.
The liability extends to acts committed even
outside the school so long as it is an
official activity of the school.
Whenever the school or teacher is being
made liable, the parents and those
exercising substitute parental authority are
not free from liability because Art. 219 of
the Family Code expressly provides that
they are subsidiarily liable.
Art. 2180 makes teachers and heads liable for
acts of students and apprentices whether
the latter are minors or not.
The liability of the teacher subsists whether
the school is academic or non- academic.
Liability is imposed only if the pupil is already
in the custody of the teacher or head. The
student is in the custody of the school
authorities as longs as he is under the
control and influence of the school and
within its premises whether the semester
had not yet begun or has already ended.
The victim of negligence is likewise required
to exercise due care in avoiding injury to
himself.
There are instances where the school might
be called upon to exercise its power over
its student for acts committed outside the
school premises and beyond school hours
in the following:
1. In cases of violation of school policies
or regulations occurring in connection
with school sponsored activity off-
campus; or
2. In cases where the misconduct of the
student involves his status as a
student or affects the good name and
reputation of the school.
GENERAL RULE: The teacher-in-charge is
liable for the acts of his students. The
school and administrators are not liable.
EXCEPTIONS: It is only the head of the
school, not the teacher who is held liable
where the injury is caused in a school of
arts and trade.
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2008 CENTRALIZED BAR OPERATIONS
OTHER PERSONS VICARIOUSLY LIABLE:
1. Innkeepers and Hotelkeepers
They are civilly liable for crimes committed in
their establishments in cases of violations
of statutes by them, in default of persons
criminally liable (Art. 102 Revised Penal Code).
They are subsidiarily liable for the restitution
of goods taken by robbery or theft within
their houses from guests lodging therein,
or for payment of the value thereof,
provided that:
a. The innkeeper was notified in advance
of the deposit of such goods within the
inn; and
b. The guest shall have followed the
directions which such innkeeper or his
representative may have given with
respect to the care and vigilance over
the goods.
2. Partnership
Partnership or every partner is liable for torts
committed by one of the partners acting
within the scope of the firm business,
though they do not participate in, ratify, or
have knowledge of such torts.
Partners are liable as joint tort-feasors.
Vicarious liability is similar to the common law
rule on respondeat superior.
Liability is entirely imputed and the
partnership cannot obviously invoke
diligence in the selection and supervision
of the partner.
3. Spouses
ABSOLUTE COMMUNITY OF PROPERTY
The absolute community property shall be for
liabilities incurred by either spouses by
reason of crime or quasi-delict in case of
absence or insufficiency of the exclusive
property of the debtor-spouse (Art. 94
Family Code).
Payments shall be considered advances to be
deducted from the share of the debtor
spouse upon liquidation of the community.
CONJUGAL PARTNERSHIP OF GAINS
GENERAL RULE: Pecuniary indemnities
imposed upon the husband or wife are not
chargeable against the conjugal
partnership but against the separate
properties of the wrongdoer.
EXCEPTIONS: Conjugal partnership should
be made liable:
1) When the profits have inured to the
benefit of the partnership, or
2) If one of the spouses committed the
tort while performing a business or if
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Torts & Damages
the act was supposed to benefit the
partnership.
REGIME OF SEPARATION OF PROPERTY
TYPES:
1. Animals
GENERAL RULE:: The possessor of an
animal or whoever may make use of the
same is responsible for the damages
which it may cause although it may
escape or be lost.
EXCEPTIONS: When the damage was
caused by force majeure or by the person
who suffered the damage (Art. 2183 Civil
Code).
2. Falling objects
The head of a family that lives in a building or
a part thereof is responsible for damages
caused by things thrown or falling from the
same (Art. 2193, Civil Code).
The term “head of the family” is not limited to
the owner of the building, and it may even
include the lessee thereof (Dingcong vs.
Kanaan. 72 Phil 14).
3. Liability of employers
Article 1711 of the NCC imposes an obligation
on owners of enterprises and other
employers to pay for the death or injuries
to their employees.
Liability is strict because it exists even if the
cause is purely accidental.
If the mishap was due to the employee’s own
notorious negligence, or voluntary act or
drunkenness, the employer shall not be
liable for compensation.
When the employee’s lack of due care
contributed to his death or injury, the
compensation shall be equitably reduced.
If the death or injury is due to the negligence
of a fellow-workman the latter and the
employer shall be solidarily liable for
compensation.
If a fellow-worker’s intentional or malicious act
is the only cause of the death or injury, the
employer shall not be answerable unless it
should be shown that the latter did not
exercise due diligence in the selection or
supervision of the plaintiff’s fellow-worker.
MEMORY AID IN CIVIL LAW
Each spouse is responsible for his/her
separate obligation.
Strict Liability
7. Nuisance
Any act, omission, establishment, business,
condition of property, or anything else
which:
a. Injures or endangers the health or
safety of others;
b. Annoys or offends the senses;
c. Shocks, defies or disregards decency
or morality;
d. Obstructs or interferes with the free
passage of any public highway or
street, or any body of water; or
e. Hinders or impairs the user of property
(Art. 694, Civil Code).
Every successive owner or possessor of
property who fails or refuses to abate a
nuisance in that property started by a
former owner or possessor is liable
therefore in the same manner as the one
who created it (Art. 686, Civil Code).
An action to abate nuisance is imprescriptible.
5. Product liability by manufacturers
Manufacturers and processors of foodstuffs,
drinks, toilet articles and similar goods shall
be liable for death or injuries caused by any
noxious or harmful substances used, although
no contractual relation exists (Art. 2187 Civil
Code).
OTHER CASES OF LIABILITY WITHOUT
FAULT:
1. Proprietor of a building or structure, for
damages resulting from its total or partial
collapse, if it should be due to lack of
necessary repairs. .
2. Breach of implied warranties.
3. Consumer Act (R.A. 7394) – any Filipino or
foreign manufacturer, producer and importer,
independently of fault shall be liable for
redress for damages caused to consumers by
defects resulting from:
a. design;
b. manufacture;
c. construction;
d. assembly and erection;
e. formulas and handling and making up; or
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2008 CENTRALIZED BAR OPERATIONS

f. presentation or packing of their products inadequate information on the use and

as well as for the insufficient or hazards thereof.
4. Art. 23, NCC

Product and Service Liability

ALTERNATIVE THEORIES ON BASIS OF Manufacturer
LIABILITY
Any person who manufactures, assembles
1. Fraud or misrepresentation or processes consumer products, except
that if the goods are manufactured,
Not all expression of opinion are actionable
assembled or processed for another
misrepresentations if they are established
person who attaches his own brand name
to be inaccurate.
to the consumer products, the latter shall
2. Warranties be deemed the manufacturer
The Consumer Act recognizes that the Privity of contract is not required.
provisions of the Civil Code on conditions
It does not preclude an action based on
and warranties shall govern all contracts of
negligence (quasi-delict) for the same act
sale with conditions and warranties.
of using noxious or harmful substances.
Retailer shall be subsidiarily liable under the
Article 97 and 99 of the Consumer Act
warranty in case of failure of both the
imposes liability on defective products and
manufacturer and distributor to honor the
services upon manufacturers independent
warranty.
of fault.
Privity of contract is not necessary.
Knowledge of the manufacturer is not
3. Negligence important; the focus is on the condition of
In product liability law, certain standards are the product and not on the conduct of the
already imposed by special laws, rules manufacturer or seller.
and regulations of proper government The strict liability under the Consumer Act is
agencies; certain acts or omissions are imposed on the manufacturers..
expressly prohibited by the statutes
Ordinarily the tradesman or seller is not liable
thereby making violation thereof
for damages caused by defective products
negligence per se.
under the Act. He is liable only when:
The liability will result if due care of an
1. it is not possible to identify the
ordinarily prudent man was not exercised
manufacturer, builder, producer or
in manufacturing, packaging marketing or
importer;
distributing of the product.
2. the product is supplied, without clear
It is negligence per se if manufacturer
identification of the manufacturer,
manufactured products which do not
producer, builder or importer;
c o m ply with the safety standards
promulgated by appropriate government 3. he does not adequately preserver
agencies. perishable goods.
4. Delict
The liability may be based on criminal DEFENSES:
negligence under the RPC or violation of
A. The manufacturer, builder, producer, or
any special law.
importer shall not be liable when it evidences:
With respect to violation of special laws, the
1) That it did not place the product on the
liability may be imposed even in the
market
absence of intent.
2) That although it did place the product on
5. Strict liability
the market such product had no defect
Manufacturers and processors of foodstuffs,
3) That the consumer of third party is solely
drinks, toilet articles, and similar goods,
at fault (Art. 97, Consumer Act)
shall be liable for death or injuries caused
by any noxious or harmful substances B. The supplier of the services shall not be held
used although no contractual relation liable when it is proven:
exists (Art. 2187, Civil Code).
1) That there is no defect in the service
rendered
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Torts & Damages
2) That the consumer of third party is
solely at fault (Art. 99, Consumer Act).
Requisites: The plaintiff should allege and
prove that:
1) The product was defective;
2) The product was manufactured by the
defendant;
INTERFERENCE OF CONTRACTS
Elements:
a. existence of a valid contract
b. knowledge on the part of the third person
of the existence of the contract
c. interference of the third person without
legal justification.
• The existence of a contract is necessary
and the breach must occur because of the
alleged act of interference; No action can
be maintained if the contract is void.
• Malice is not essential.
Elements of privilege to interfere
a. The defendant’s purpose is a justifiable
one, and
b. The actors employ no means of fraud or
deception which are regarded as unfair.
Extent of Liability:
A. Rule in Daywalt v. La Corporation (GR. No. L-13505.
February 4, 1919)
Defendant cannot be held liable for more
than the amount for which the contracting
party who was induced to break the contract
can be held liable.
B. Rule under Article 2201 and 2202 Civil Code
1. If in bad faith: defendant is liable for all
natural and probable consequences of his
act or omission, whether the same is
foreseen or unforeseen.
2. If in good faith: defendant is liable only
for consequences that can be
foreseen.
INTERFERENCE WITH PROSPECTIVE
ADVANTAGE
It is a tort committed when there is no contract yet
and the defendant is only being sued for inducing
another not to enter into a contract.
MEMORY AID IN CIVIL LAW
3) The defective product was the cause
of his injury.
Kinds of Defective Products
1. manufacturing defect
2. design defect
3. presentation defect
4. absence of appropriate warning
Business Torts
UNFAIR COMPETITION.
Unfair Competition in agricultural, commercial,
or industrial enterprises, or in labor, through
the use of force, intimidation, deceit,
machination or any unjust or oppressive or
highhanded method shall give rise to a right of
action by a person who thereby suffers
damage (Art. 27, Civil Code).
Cases Included:
a. passing off and disparagement of products
b. interference
c. misappropriation
d. monopolies and predatory pricing
SECURITIES RELATED TORTS
Kinds (Sec. 73, SRC)
a. Fraudulent Transactions
b. Misstatements or Omission of statement of
a material fact required to be stated
• Defendants are free from liability if they
can prove that at the time of the
acquisition the plaintiff knew of the untrue
statement or if he was aware of the falsity.
Joint and Solidary Liability: if two or more
persons are made liable as defendants, they
shall be jointly and severally liable for the
payment of damages. Any person sued
separately may recover contribution from any
other person who would have been liable to
make the same payment, unless the former
was guilty of fraudulent representation and
the latter was not.
Extent of Damages: Not exceeding triple the
amount of the transaction.
Prescriptive Period: Action must be brought
within 2 years after discovery of facts
constituting the cause of action and within 5
yrs after such cause of action accrued.
San Beda College of Law
Damages
Damages
DAMAGE
The detriment, injury or loss which is occasioned
by reason of fault of another in the property or
person.
DAMAGES
Damages may be defined as the pecuniary
compensation, recompense, or satisfaction for an
injury sustained, or as otherwise expressed, the
pecuniary consequences which the law imposes
for the breach of some duty or the violation of
some right (People v. Ballesteros, G.R. No. 120921 January
29, 1998).
PECUNIARY LOSS
A loss of money or something by which money or
something of money value may be acquired.
DAMNUM ABSQUE INJURIA (DAMAGE WITHOUT
INJURY)
A person may have suffered physical hurt or injury,
but for as long as no legal injury or wrong has
been done, there is no liability.
Injury Damage Damages
Legal Loss, hurt or The recompense or
invasion harm which compensation awarded
of a legal results from for the damage suffered
right the injury
Everyone has the obligation to repair or make
whole the damage caused by another by
reason of his act or omission, whether done
intentionally or negligently and whether or not
punishable by law (Occena v. Icamina. G.R. No.
82146. January 22, 1990).
NOTES:A complaint for damages is a personal
action
Proof of pecuniary loss is necessary to
successfully recover actual damages from the
defendant. No proof of pecuniary loss is
necessary in case of moral, nominal,
temperate, liquidated or exemplary damages.
The assessment of such damages, except
liquidated ones, is left to the discretion of the
court according to the circumstances of each
case.
Kinds of damages (MENTAL)
1. ACTUAL OR COMPENSATORY
2. MORAL
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2008 CENTRALIZED BAR OPERATIONS
3. NOMINAL
4. TEMPERATE OR MODERATE
5. LIQUIDATED
6. EXEMPLARY OR CORRECTIVE
A C T U A L O R C O M P E N S AT O RY
DAMAGES (Arts. 2199-2215)
Comprehends not only the value of the loss
suffered but also that of the profits which the
obligee failed to obtain.
Classification:
1. Dano emergente – loss of what a person
already possesses
2. Lucro cessante – failure to receive as a
benefit that would have pertained to him
a. Loss or impairment of earning
capacity in cases of temporary or
permanent personal injury.
b. Injury to the plaintiff’s business
standing or commercial credit.
NOTE: In crimes and quasi-delict, the
defendant shall be liable for all damages
which are the natural and probable
consequences of the act and omission
complained of. It is not necessary that such
damages have been foreseen or could have
reasonably foreseen by the defendant (Art.
2202, Civil Code).
The amount should be that which would put
plaintiff in the same position as he would
have been if he had not sustained the
wrong for which he is now getting his
compensation or reparation.
To recover damages, the amount of loss must
not only be capable of proof but must
actually be proven.
Uncertainty as to the precise amount is not
necessarily fatal.
Limitation on contract damages: DOCTRINE OF
F O R E S E E A B L E O R A N T I C I PAT E D
CONSEQUENCES – only those injuries which
could have been reasonably foreseen by
the parties by the parties at the time the
contract was entered into are recoverable.
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Torts & Damages
LOSS OF EARNING CAPACITY:
Variables considered are:
1. life expectancy
2. net income/earnings
Requisites:
1. determination of the extent to which such
capacity has been diminished;
2. determination of the permanency of the
decrease in earning capacity;
3. the fixing of the amount of money which
will compensate for the determined extent
and length of impairment, including a
reduction of the award to its present
worth.
Formula:
{2/3 x (80–age of death)} x mo. Earnings x 12
2 time the claim is made judicially or
NOTE: Life expectancy is computed as follows:
{ 2/3 x (80-age at death) }
Net earnings is the total of the earnings less
expenses necessary for the creation of such
earnings and less living or other incidental
expenses.
Loss of profits
May be determined by considering the average
profit for the preceding years multiplied by the
number of years during which the business
was affected by the wrongful act or breach.
Attorney’s fees (Art. 2208)
They are actual damages. It is due to the
plaintiff and not to the counsel.
Plaintiff must allege the basis of his claim for
attorney’s fees in the complaint; the basis
should be one of the 11 cases specified in
Article 2208 of the Civil Code.
Interests
Award of interest in the concept of actual and
compensatory damages actual damages.
The rate of interest, as well as the accrual
thereof is imposed as follows:
1. When the obligation is breached and it
consist of payment of sum of money,
i.e., a loan or forbearance of money:
a. The interest due should be that
which may have been stipulated in
writing; furthermore, the interest
due shall itself earn legal interest
from the time it is judicially
demanded.
b. In the absence of stipulation, the
rate of interest shall be 12% per
annum to be computed from
default, i.e., from judicial or extra-
MEMORY AID IN CIVIL LAW
judicial demand under and subject
to the provisions of Article 1169 of
the Civil Code.
2. When the obligation, not constituting a
loan or forbearance or money, is
breached:
• An interest on the amount of
damages to be awarded may be
imposed at the discretion of the
court at the rate of 6% per annum.
• No interest shall be adjudged on
unliquidated claims or damages,
except when or until demand can
be established with reasonable
certainty.
• Where the demand is established
with reasonable certainty, the
interest shall begin to run from the
extrajudicially.
3. When the judgment of the court
awarding the sum of money becomes
final and executory, the rate of legal
interest shall be 12% per annum from
such finality until its satisfaction.
Mitigation of Liability (Articles 2203, 2204, 2214 and
2215, NCC)
DOCTRINE OF AVOIDABLE CONSEQUENCES
A party cannot recover damages flowing from
consequences which the party could
reasonably have avoided.
It has a reasonable corollary: a person who
reasonably attempts to minimize his damages
can recover the expenses that he incurred.
DOCTRINE OF AVOIDABLE CONSEQUENCES AND
CONTRIBUTORY NEGLIGENCE DISTINGUISHED
Doctrine of Avoidable Contributory
Consequences Negligence
Acts of the plaintiff Plaintiff’s act or omission
occur after the act or occurs before or at the
omission of the time of the act or
defendant omission of the
defendant
MORAL DAMAGES (Arts. 2217-2220)
Includes physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation,
wounded feelings, moral shock, social
humiliation, and similar injury.
No proof of pecuniary loss is necessary.
San Beda College of Law
GENERAL RULE: The plaintiff must allege and
prove:
1. The factual basis for moral damages; and
2. Its causal relation to the defendant’s act
EXCEPTIONS: Moral damages may be awarded
to the victim in criminal proceedings without
the need for pleading of proof of the basis
thereof.
Requisites for award of moral damages:
1. There must be an injury whether physical,
mental or psychological, clearly sustained
by the claimant;
2. There must be a culpable act or omission.;
3. Such act or omission is the proximate
cause of the injury;
4. The damages are predicated on the cases
cited in Art. 2219.
NOTE: as a rule, a corporation may not be
awarded moral damages; it being a juridical
person, it cannot suffer from wounded feelings,
serious anxiety, mental anguish or moral shock.
Article 2279, par. 7 of the NCC expressly
authorizes the recovery of moral damages in
cases of libel, slander or any other form of
defamation (Filipinas Broadcasting Network, Inc. v. Ago
Medical and Educational Center – Bicol Christian College of
Medicine, et al..GR. No. 141994. January 17, 2005).
NOMINAL DAMAGES (Arts. 2221-2223)
Nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated
or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered
by him (Art. 2221, Civil Code).
Small sums fixed by the court without regard to
the extent of the harm done to the injured
party.
Law presumes damage although actual or
compensatory damages are not proven.
They are damages in name only and are allowed
simply in recognition of a technical injury
based on a violation of a legal right.
! END OF TORTS AND DAMAGES
255
2008 CENTRALIZED BAR OPERATIONS
Nominal damages cannot co-exist with actual or
compensatory damages.
TEMPERATE OR MODERATE DAMAGES
(Arts. 2224-2225)
These are damages, which are more than nominal
but less than compensatory, and may be
recovered when the court finds that some
pecuniary loss has been suffered but its
amount cannot be proved with certainty (Art.
2224, Civil Code)
In cases where the resulting injury might be
continuing and possible future complications
directly arising from the injury, while certain to
occur are difficult to predict, temperate
damages can and should be awarded on top of
actual or compensatory damages; in such
cases there is no incompatibility between
actual and temperate damages.
LIQUIDATED DAMAGES (Arts. 2226-2228)
Those agreed upon by the parties in a contract, to
be paid in case of breach thereof.
EXEMPLARY OR CORRECTIVE
DAMAGES (Arts. 2229-2235)
Imposed by way of example or correction for
the public good, in addition to the moral,
temperate, liquidated or compensatory
damages.
Requisites for the award of exemplary
damages:
1. They are imposed by way of example in
addition to compensatory damages and
Imposed only after the claimants right to
them has been established;
2. They cannot be recovered as a matter of
right, their determination depending upon
the amount of compensatory damages
that may be awarded;
3. The act must be accompanied by bad faith
or done in wanton, fraudulent, oppressive
or malevolent manner.
"
256 MEMORY AID IN CIVIL LAW
Land Titles & Deeds

CIVIL LAW
LAND TITLES AND DEEDS
LAND TITLES AND DEEDS

Land Registration
a judicial or administrative proceeding whereby a 4. To quiet title to land and to stop forever
person’s claim of ownership over a particular land any question as to the legality of said title
is determined and confirmed or recognized so that (Legarda v. Saleeby. GR. No. 8936. October 2, 1915).
such land and the ownership thereof may be
5. To avoid conflicts of title in and to real
recorded in a public registry.
estate, and to faciltate transactions (Tiburcio
v. PHHC.. GR No. L-13479. October 31,1959).
Laws Implementing Land Registration 6. To guarantee the integrity of land titles and
1. Property Registration Decree (P.D. 1529, as to protect their indefeasibility once the
claim of ownership is established and
amended) - amended and superseded C.A.
recognized (Traders Royal Bank v. CA. GR. Nos.
496
114299 and 118862. March 9, 2000).
2. Cadastral Act (Act 2259, as amended)
3. Public Land Act (Com. Act 141, as amended)
TORRENS SYSTEM
4. P.D. No. 27
A system for registration of land under which,
5. Comprehensive Agrarian Reform Law of upon the landowner’s application, the court
1988 (R.A. No. 6657, as amended) may, after appropriate proceedings, direct the
register of deeds for the issuance of a
Purposes: (CUP-QCI)
certificate of title.
1. To issue a certificate of title to the owner • Introduced in the the Philippines by Act
which shall be the best evidence of his
No. 496, which took effect on February 1,
ownership of the land described therein
1903 by Sir Robert R. Torrens
(Lee Tek Sheng v. CA. GR No. 115402. July 15,
1998). • Was later amended and superseded by
P.D. no. 1529, which took effect on June
2. To give every registered owner complete
11, 1978, otherwise known as the
peace of mind (Republic v. CA.. GR. Nos.
Property Registration Decree (now the
L-46626-27. December 27, 1979).
prevailing law on Land Titles and Deeds).
3. To relieve the land of unknown claims
Purposes:
(Roxas v. Enriquez. GR No. 8539. December 24,
1914 ). 1. To avoid possible conflicts of title
regarding real property,
EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
San Beda College of Law
2. To facilitate transactions relative thereto by
giving the public the right to rely upon the
face of the Torrens certificate of title and to
dispense with the need of inquiring further.
EXCEPT when the party concerned has
actual knowledge of facts and
circumstances that should imply a
reasonably cautious man to make such
further inquiry.
Effects of issuance of title
a. the land is placed under the operation of
Torrens System
b. Land is relieved from all claims except
those noted thereon and provided by law
c. Title to the land become non-prescriptible
d. The land become incontrovertible and
indefeasible
e. The certificate of title is not subject to
collateral attack
NOTE: Registration was never intended as a
means of acquiring ownership (Republic vs. CA, supra).
Registration is not equivalent to legal title.
Under the Torrens system, registration only gives
validity to the transfer or creates a lien upon
the land. It merely confirms, but does not
confer, ownership (Lu v. Manipon, G.R. No. 147072,
May 7, 2002)
Lands granted under Spanish Mortgage Law
which are not yet covered by certificate of title
under Torrens System are considered as
unregistered lands (Sec. 3 P.D. 1529).
TORRENS TITLE
Certificate of ownership issued by the Register
of Deeds, naming and declaring the owner of
the real property described therein, free from
all liens and encumbrances except such as
may be expressly noted thereon or otherwise
reserved by law.
• Conclusive against the whole world, it is
guaranteed to be indefeasible,
unassailable, and imprescriptible.
• Title once registered cannot be impugned,
altered, changed, modified, enlarged, or
diminished except in a direct proceeding
permitted by law.
Probative Value: Torrens Title may be received in
evidence in all courts of the Philippines, and
shall be conclusive as to all matters contained
therein, principally the identity of the owner of
the covered land thereby.
Two Types of Torrens Certificates of Title
1. Original Certificate of Title is the first title
issued in the name of the registered owner
by the Register of Deeds covering a parcel
of land which had been registered under
257
2008 CENTRALIZED BAR OPERATIONS
the Torrens System by virtue of a judicial
or administrative proceeding.
It consists of one original copy filed in
the Register of Deeds, and the owner’s
duplicate certificate delivered to the owner.
2. Transfer Certificate of Title is the title
issued by the Register of Deeds in favor of
a transferee to whom the ownership of a
registered land has been transferred by
any legal mode of conveyance (e.g. sale,
donation). It also consists of an original
and an owner’s duplicate certificate.
REGALIAN DOCTRINE (JURA REGALIA)
(Constitutional basis: Art. 12, Sec. 2 and 3)
a time-honored Constitutional precept that all
lands of the public domain belong to the State,
and that the State is the source of any asserted
right to ownership in land and charged with the
conservation of such patrimony (Republic v.
Intermediate Appellate Court,.G.R. No. 71285. November 5,
1987)
! does not negate native title to lands held in
private ownership since time immemorial (Cruz
v. Secretary of Environment and Natural Resources. GR
No. 135385. December 6, 2000).
MODES OF ACQUIRING TITLE (IP/SO)
1. BY POSSESSION OF LAND SINCE TIME
IMMEMORIAL - justifies the presumption that
the land had never been art of the public
domain and that it had been private property
even before the Spanish conquest (Republic v.
CA. GR. No. 130174. July 14, 2000).
2. BY POSSESSION OF ALIENABLE PUBLIC
LAND – Under the Public land Act (C.A. No.
141), citizens of the Philippines who by
themselves or through their predecessors in
interest have been in open, continuous,
exclusive and notorious possession and
occupation of alienable and disposable
agricultural land of the public domain
under a bona fide claim of ownership
since June 12,1945, or earlier, except when
prevented by war or force majeure, shall be
conclusively presumed to have performed all
the conditions essential to a government grant
and shall be entitled to a certificate of title.
(C.A. No. 141, Secs. 47 and 48 (b) as amended by PD
1073).
3. BY SALE, DONATION, AND OTHER MODES
OF ACQUIRING OWNERSHIP (LSDCP)
a. by Law
Examples:
i. Free Patents based on the Public
Land Acts
258
Land Titles & Deeds
ii. Title to ACCRETION in river banks
(Art. 457, NCC)
Accretion does not automatically
become registered. It needs new
registration.
Accretions on the bank of a lake,
belong to the owners of the estate
to which they have been added,
while accretion on the sea bank
still belongs to the public domain,
and is not available for private
ownership until formally declared
by the government to be no longer
needed for public use (Republic v.
Amanda vda. De Castillo. GR. No.
L-69002. June 30, 1988).
Registration does not protect the
riparian owner against diminution
of land through accretion.
iii. Reclamation - filling up of parts of the
sea for conversion to land.
The SC has ruled that only the
National Government may engage
in reclamation projects (Republic v.
CA, 299 SCRA 199; P.D. 3-A).
Emancipation patent or grant based
on P.D. No. 27 (CARP of 1972) for
the purpose of ameliorating the
sad plight of farmers and
releasing them from the bondage
of the soil.
iv. Title by escheat (Rules of Court, Rule 91)
b. By Donation
c. By Succession (Testate and Intestate)
By descent, title is acquired when an heir
succeeds the deceased owner in
testate or intestate.
By devise, person acquires land from one
who may not be a relative, if he is
named in the deceased’s will.
d. In consequence of certain contracts, by
tradition
e. By prescription (Arts. 712, 1134, 1137, NCC)
- possession of land for required number
of years and assertion of ownership
through an interrupted actual possession
of property within the period of time
prescribed by law
Agencies Implementing Land Registration
Proceedings under the Torrens System
3. Courts
4. Department of Environment and Natural
Resources (DENR)
MEMORY AID IN CIVIL LAW
5. Department of Justice (DOJ) through the
Land Registration Authority (LRA) and its
Register of Deeds
6. Department of Land Reform (DLR)
7. Department of Agriculture (DAR)
ADMINISTRATION OF THE TORRENS SYSTEM
1. Land Registration Authority (LRA)
Agency of the government charged with
the execution of laws relative to the
registration of lands and under executive
supervision of DOJ (Sec. 4 P.D. 1529).
Functions of the Commissioner: (DR.
VICES)
a. Issue decrees of registration pursuant to
final judgments of the courts in land
registration proceedings and cause the
issuance by the Registers of Deeds of the
corresponding certificates of title.
b. Exercise supervision and control over all
Registers of Deeds and other personnel
of the Commission.
c. Resolve cases elevated en consulta by or
on appeal from the decision of the
Register of Deeds
d. Exercise executive supervision over all
clerks of court and personnel of the
courts with respect to the discharge of
their duties and functions in relation to the
registration of lands
e. Implement all orders, decisions, and
decrees promulgated relative to the
registration of lands and issue, subject to
the approval of the Secretary of Justice,
all needful rules and regulations
f. Verify and approve subdivision,
consolidation, and consolidation-
subdivision survey plans of properties
titled under Act 496 and PD 1529 except
those covered by PD 957.
g. Acts as Clerk of court in land registration
proceedings
2. Register of Deeds (RD)
The public repository of records of
instruments affecting registered or
unregistered lands and chattel mortgages
in the province or city wherein such office
is located (Sec. 10, P.D. 1529).
Function: To immediately register an
instrument presented for registration
dealing with real or personal property
which complies with all the requisites for
registration.
NOTE: The function of the Register of
Deeds with reference to the registration of
deeds, encumbrances, instruments and
San Beda College of Law 259
2008 CENTRALIZED BAR OPERATIONS

the like is ministerial in nature (Baranda v. MODES OF REGISTERING TITLE

Gustilo. GR. No. 81163. September 26, 1988).
1. Judicial
The law on registration does not • filing of petition with the RTC of the
require that only valid instruments shall be
place where the land is located
registered. If the purpose of registration is
merely to give notice, then questions • issuance of a decree by LRA
regarding the effect or invalidity of • issuance of Original Certificate of Title
instruments are expected to be decided (OCT) by Register of Deeds
after, not before registration. It must follow
as a necessary consequence that 2. Administrative
registration must first be allowed, and • filing of application at CENRO/
validity or effect litigated afterwards. PENRO
(Almirol v. The Register of Deeds of Agusan. GR No.
L-22486. March 20, 1968). • forwarded to the Reg. Director and/or
DENR for the issuance of patent and
Instances when RD may deny registration: Register of Deeds for issuance of
(NIMP)
OCT
1. Where there is more than 1 copy of
Registrable Lands:
the owner’s duplicate certificate of title
and not all such copies are presented 1. Alienable public agricultural lands
in the Register of Deeds 2. Private lands
2. Where the voluntary instrument bears Non-registrable lands:
on its face infirmity
Those found in Civil Code provisions dealing
3. Where the validity of the instrument with non-registrable properties (e.g. property of
sought to be registered is in issue in public dominion)
pending court suit
Specific kinds of non-registrable properties
4. When the document is not verified or lands: (F!M"-NLW-GPA)
and notarized (Gallardo v. IAC. GR. No.
L-67742. October 29, 1987). a. Forest or timberland, public forest, &
forest reserve
NOTE: A deed of sale executed in a place
other than where the property is located does b. Mangrove swamps
not affect extrinsic validity of the instrument as c. Mineral lands
long as the notary public concerned has
authority to acknowledge the document d. Foreshore land & seashore
executed within his territorial jurisdiction. e. Navigable rivers, streams & creeks
Notarial acknowledgment attaches full f. Lakes
faith and credit to document and vests upon it
g. Military Reservations
presumption of regularity. (Sales v. CA, G.R. No.
L-40145, July 29, 1992) h. Watershed
i. Grazing lands
j. Previously titled land
k. Alluvial deposit along river when man-
made

Systems of Registration
ORIGINAL REGISTRATION Kinds of Original Registration
UNDER PD NO. 1529 1. Voluntary – by filing with the proper court
NATURE: proceeding brought before the Regional a. Under P.D. No. 1529 (Property Registration
Trial Court (as a land registration court) to Decree)
determine title or ownership of land on the
b. Under Sec. 48 of CA No. 141, Public
basis of an application for registration or
Land Act
answer/opposition by a claimant in a cadastral
registration. 2. Involuntary – cadastral proceedings
• compulsory registration initiated by the
government, to adjudicate ownership of
land
260
Land Titles & Deeds
• involuntary on the part of the claimants
but they are compelled to substantiate
their claim or interest through an answer
REQUISITES (STEPS) IN ORDINARY LAND
REGISTRATION PROCEEDINGS (P.D. 1529):
(SFS-TP-SFH-PIEST)
The following requisites must also be complied
with in the confirmation of imperfect or incomplete
title under Section 48 (b) of the Public Land Act
1. Survey of the land by the Land Management
Bureau or a duly licensed private surveyor;
NOTES: must be drawn in a tracing cloth plan
approved ONLY by the Director of Land
Management (authority of LRA to approve
such plan was withdrawn by P.D. 239 dated
July 9, 1983)
2. Filing of Application for Registration by the
applicant at the RTC of the province, city or
municipality where property is situated.
NOTES: it is then indorsed to the MTC if there
is no controversy over the land or its value is
less than P100,000
Bureau of Land must always be furnished with
a copy of the petition and all pertinent
documents
If land is situated between boundaries of two
provinces, application must be filed:
a. boundaries are not defined – in the
RTC of the place where it is declared
for taxation purposes;
b. boundaries are defined – separate
plan for each portion must be made
by surveyor and a separate
application for each lot must be filed
with appropriate RTC.
3. Setting of date for initial hearing by the court;
4. Transmittal of Application and date of initial
hearing together with all documents or other
evidences attached thereto by the Clerk of
Court to the Land Registration Authority;
5. Publication of Notice of Filing of Application
and date and place of hearing once in the
Official Gazette and once in a newspaper of
general circulation in the Philippines;
6. Service of Notice upon contiguous owners,
occupants and those known to have interest
in the property by the sheriff;
7. Filing of Answer or Opposition to Application
by any person whether named in the notice or
not;
8. Hearing of the case by the court;
NOTES: Republication or amendment of
technical description of land is necessary
when there is substantial increase or change
of the area of the land. If increase is merely
MEMORY AID IN CIVIL LAW
minimal, no republication is needed (Benin v.
Tuason. GR. No. L-26127. June 28, 1974).
9. Promulgation of judgment by the court;
10. Issuance of decree or order by the court
declaring the decision final and instructing the
Land Registration Authority to issue a Decree
of Confirmation and Registration;
NOTES: it is not the court BUT the LRA which
issues the decree of confirmation and
registration
1 year after issuance of decree, it
becomes incontrovertible and
amendments of the same will not be
allowed except merely in case of clerical
errors.
11. Entry of Decree in the Land Registration
Authority;
NOTE: This serves as the reckoning date to
determine the 1-year period from which one
can impugn the validity of the registration.
12. S e n d i n g o f c o p y o f D e c r e e t o t h e
corresponding Register of Deeds; and
13. Transcription of Decree in the registration
book and issuance of Owner’s Duplicate
Original Certificate of Title of the applicant by
the Register of Deeds upon payment of the
prescribed fees.
PERSONS WHO MAY APPLY FOR
REGISTRATION (Sec. 14, PD No. 1529):
1. Those who, by themselves or through their
predecessors-in-interest, have been in
OPEN, CONTINUOUS, EXCLUSIVE AND
NOTORIOUS POSSESSION AND
OCCUPATION of alienable and disposable
lands of the public domain under a bona
fide claim of ownership since June 12,
1945, or earlier;
2. Those who have acquired ownership of
private lands by PRESCRIPTION under
the provisions of existing laws;
3. Those who have acquired ownership of
private lands or abandoned river beds by
right of ACCESSION or accretion; and
4. Those who have acquired ownership of
land in any OTHER manner provided for
by law.
• where land is owned in common- ALL shall file
jointly;
• sold under PACTO DE RETRO:
GENERAL RULE: VENDOR A RETRO may
file.
EXCEPTION: VENDEE A RETRO, should the
period for redemption expire during
pendency of registration proceedings and
San Beda College of Law
ownership to property consolidated in
vendee a retro
• under TRUST: TRUSTEE may file unless
prohibited by the instrument creating the trust
NOTE: All these persons must be natural-born
Filipino Citizens. However, by way of exception,
juridical persons may apply for registration of
leased agricultural and disposable lands not
exceeding 1,000 hectares in area for a period of
25 years and renewable for not more than 25
years (Sec. 3, Chapter XII, 1987 Constitution).
Notwithstanding the prohibition in the 1973 and
1987 Constitutions against private corporations
holding lands of the public domain except by
lease, still a private corporation may institute
confirmation proceedings under Section 48(b) of
Public Land Act if, at the time of institution of the
registration proceedings, the land was already
private land (Dir. of Lands v. IAC and ACME Plywood.
GR. No. 73002. December 29, 1986).
PERSONS WHO CANNOT FILE AN
APPLICATION FOR REGISTRATION
(PAMP)
1. A public land sales applicant insofar as the
land covered by his sales application is
concerned. Reason: he acknowledged that
he is not the owner of the land and that the
same is public land (Palawan Agricultural and
Industrial Co., Inc. v. Dir. of Lands. G.R. No. L-25914.
March 21, 1972).
2. A MORTGAGEE or his successor in interest
to the mortgage, notwithstanding the lapse of
the period for the mortgagor to pay the loan
secured to redeem it. Reason: such act
would amount to a pactum commissorium
which is against good morals and public
policy (Reyes v. Sierra. GR. No. L-28658. October 18,
1979).
3. An ANTICHRETIC creditor cannot also
acquire by prescription the land surrendered
to him by the debtor. Reason: His
possession is not in the concept of owner
(Ramirez v. CA. GR No. 117247. April 12, 1996).
4. A person or entity whose claim of ownership
to land had been PREVIOUSLY denied in a
reivindicatory action (Kidpalos vs. Baguio Mining Co.
GR. No. L-19940. August 14, 1965).
AMENDMENTS TO APPLICATION THAT
REQUIRE PUBLICATION
The court may order, at any time, an application to
be amended by striking out one or more of the
parcels of land applied for or by a severance of
the publication (Sec. 18 P.D. 1529)
Amendments to the application including joinder,
substitution, or discontinuance as to the parties
may be allowed by the court at any stage of
261
2008 CENTRALIZED BAR OPERATIONS
the proceedings upon just and equitable terms.
In such cases, publication is not necessary.
Publication and notice are necessary where the
amendment to the application consists in:
(SIA)
a. Substantial change in the boundaries
b. Increase in the area of the land applied
for
c. the inclusion of additional land
NOTE: The purpose of the new publication is to
give notice to all persons concerned regarding the
amended application. Without a new publication,
the registration court cannot acquire jurisdiction
over the area covered by the original application,
and the decision of the registration court would be
a nullity insofar as the decision concerns the
newly included land (Benin vs. Tuason, supra).
an amendment due to change of name of the
applicant does not require republication (Dir. of
Lands v. IAC. GR No. 73246. March 2, 1993).
SUBSEQUENT REGISTRATION
Where incidental matters after original registration
may be brought before the land registration
court by way of motion or petition filed by the
registered owner or a party in interest.
Rules as to the necessity and effects of
registration in general
a. Except a will that purports to convey or
affect a registered land, the mere
execution of deeds of sale, mortgages,
leases or other voluntary documents
serves only 2 purposes: (1) as a contract
between the parties thereto and (2) as
evidence of authority to the RD to register
such documents (Sec. 51, PD 1529)
b. It is only the act of registering the
instrument in the Register of Deeds of the
province of city where the land lies which
is the operative act that conveys
ownership or affects the land insofar as
third persons are concerned (Sec. 51, PD
1529).
c. The act of registration creates a
constructive notice to the whole world of
such voluntary or involuntary instrument
or court writ or process (Sec. 52 PD 1529).
262 MEMORY AID IN CIVIL LAW
Land Titles & Deeds

Scope of Subsequent Dealings with RULES AND DOCTRINES:

Registered land VOLUNTARY DEALINGS
VOLUNTARY AND INVOLUNTARY DEALINGS
In voluntary sale of land, the registration of the
DISTINGUISHED
instrument is the operative act that transmits or
Voluntary Involuntary transfers title.
Dealings Dealings
Where there is nothing on the certificate of title to
Concept Refer to deeds, Refer to such writ indicate any cloud or vice in the ownership of
instruments or order or process the property, or any encumbrance thereon, the
documents which issued by a court purchaser is not required to explore further
are results of the of record affecting than what the Torrens title upon its face
free and voluntary registered land indicates in quest for any hidden defect or
acts of the parties which by law inchoate right that may subsequently defeat
thereto should be his right thereto (Fule v. Legare. GR No. 1795.
registered to be February 28, 19631).
effective, and also
to such The exception to the above rule is embodied in
instruments which the case of Dela Merced v. GSIS (GR No.
are not the willful 140398. September 11, 2001) where the court ruled
acts of the that “when the purchaser or mortgagee is a
registered owner financing institution, the general rule that a
and which may purchaser or mortgagee of the land is not
have been required to look further than what appears on
executed even the face of the title does not apply.
without his Every person dealing with registered land may
knowledge or safely rely on the correctness of the certificate
against his of title issued therefore and the law will in no
consent. way oblige him to go behind the certificate to
Kinds - sale - attachment determine the condition of the property. Even
- real property - mandamus if a decree in a registration proceeding is
mortgage - sale on infected with nullity, still, an innocent purchaser
- lease execution of for value relying on a Torrens title issued in
- pacto de retro judgment or sales pursuance thereof is protected (Cruz v. CA &
sale for taxes Suzara. GR. No. 120122).
-extra-judicial - adverse claims
Although generally a forged or fraudulent deed is
settlement - notice of lis
a nullity and conveys no title, however, there
- free patent/ pendens
are instances when such a fraudulent
homestead
document may become the root of a valid title.
- powers of
One such instance is where the certificate of
attorney
title was already transferred from the name of
- trusts
the true owner to the forger, and while it
Effects An innocent Entry thereof in remained that way, the land was subsequently
of regis- purchaser for value the day book of sold to an innocent purchaser (Fule v. Legare,
tration of registered land the Register of supra).
becomes the Deeds is sufficient
Tomas v. Tomas (GR No. L-36897. June 25, 1980): the
registered owner notice to all
the moment he persons even if above rule cannot be applied where the owner
presents and files the owner’s still holds a valid and existing certificate of title
a duly notarized duplicate covering the same property because the law
and valid deed of certificate of title protects the lawful holder of a registered title
sale and the same is not presented over the transfer of a vendor, bereft of any
is entered in the to the Register of transmissible right
day book and at Deeds.
the same time he
MIRROR DOCTRINE
surrenders or
presents the Well settled is the rule that all persons dealing
owner’s duplicate with property covered by Torrens certificate of
certificate of title title are not required to go beyond what
covering the land appears on the face of the title. When there is
sold. nothing on the COT indicating any cloud or
vice in the ownership of the property, or any
encumbrance thereon, the purchaser is not
required to explore further than what the
Torrens Title upon its face indicates in quest for
San Beda College of Law
any hidden defect or inchoate right that may
subsequently defeat his right thereto (Centeno v.
CA, G.R. No. L-40105, November 11, 198; Sigaya, et.al.
v. Mayuga, et.al. G.R. No. 143254, August 18, 2005).
Exceptions for applicability: (BALIK)
1. purchaser in bad faith (Egao v. CA, G.R. No.
79787, June 29, 1989];
2. where a person buys land not from the
registered owner but from one whose right
to the land has been merely annotated on
the COT (Quiniano v. CA, GR No. L-23024, May
31, 1971);
3. purchaser of land the certificate of title
contains a notice of lis pendens;
4. sufficiently strong indications to impel
closer inquiry into the location, boundaries
and condition of the lot (Francisco v. CA 153
SCRA 330, 336, 337);
5. purchaser with full knowledge of flaws and
defects in the title (Bernales v. IAC, G.R. Nos.
71490-91, June 28, 1988; Lu v. Manipon, G.R. No.
147072, May 7, 2002).
• The presence of anything that excites
or arouses suspicion should then
prompt the vendee to look beyond the
vendor’s certificate and investigate the
title appearing on the face of that
certificate. A vendee who does not do
so cannot be denominated either as
an innocent purchaser for value or as
a purchaser in good faith and hence,
does not merit the protection of the
law (Sps. Domingo, et.al. v. Reed. GR No.
157701. Dec. 9, 2005).
INVOLUNTARY DEALINGS
Involuntary dealings affecting registered land
which must be registered:
a. attachments (Sec. 69 PD 1529)
b. sale on execution or for taxes or for any
assessment (Sec. 74 PD 1529)
c. adverse claim (Sec. 70 PD 1529)
d. notice of lis pendens (Sec. 76 PD 1529)
Claim or interest is adverse when:
a. claimant’s right or interest in registered
land is adverse to the registered owner;
b. such right arose subsequent to date of
original registration;
c. no other provision is made in the Decree
for the registration of such right or claim
(Sec. 70, 1st par., P.D. 1529)
Formal requisites of an adverse claim for
purposes of registration: (WNR)
a) adverse claimant must state the following
in writing:
1) his alleged right or interest
263
2008 CENTRALIZED BAR OPERATIONS
2) how and under whom such alleged
right or interest is acquired
3) the description of the land in which the
right or interest is claimed
4) the certificate of title number
b) such statement must be signed and sworn
to before a notary public
c) claimant shall state his resIdence or place
to which all notices may be served upon
him
NOTE: an adverse claim is a notice to third
persons that someone is claiming an interest
on the property or has a better right than the
registered owner thereof, and that any
transaction regarding the disputed land is
subject to the outcome of the dispute (Sajonas v.
CA. GR No. 102377. July 5, 1996).
Notice lis pendens is intended to
constructively advise, or warn all people who
deal with the property that they so deal with it
at their own risk, and whatever rights they
may acquire in the property in any voluntary
transaction are subject to the results of the
action, and may well be inferior and
subordinate to those which may be finally
determined and laid down therein (Heirs of
Maria Marasigan v. IAC. GR No. L-69303 July 23,
1987).
Notice of lis pendens is proper in the following
cases: (RQ-COP)
1. to recover possession of real estate
2. to quiet title thereto
3. to remove clouds upon the title thereof
4. for partition, and
5. any other proceeding of any kind in court
directly affecting the title to the land or the
use of occupation thereof or the building
thereon.
When notice of lis pendens inapplicable:
(PAPALF)
1. proceedings for the recovery of money
judgments
2. attachments
3. proceedings on the probate of wills
4. administration of the estate of deceased
persons
5. levies on execution
6. Foreclosure
NOTE: notice of lis pendens may be cancelled
in the following cases before final judgment
upon order of the court: (MEND-PC)
1. when it is shown that the notice is for the
purpose of molesting the adverse party
264
Land Titles & Deeds
2. when it is shown that it is not necessary to
protect the right of the party who caused
the registration thereof
3. where the evidence so far presented by
the plaintiff does not bear out the main
allegations of the complaint
4. where the continuances of the trial are
unnecessarily delaying the determination
Judicial Confirmation of Imperfect or Incomplete Title
Who may apply
1. Filipino citizens who by themselves or
through their predecessors-in-interest
have been in open, continuous, exclusive
and notorious possession and occupation
of alienable and disposable lands of public
domain under a bona fide claim of
acquisition since June 12, 1945 or prior
thereto or since time immemorial (CA No.
141, Section 48, as amended by PD No. 1073, Sec. 4).
2. Filipino citizens who by themselves or their
predecessors-in-interest have been, prior
to the effectivity of PD 1073 on January
25, 1977, in open, continuous, exclusive
and notorious possession and occupation
of agricultural lands of the public domain,
under a bona fide claim of acquisition of
ownership, for at least 30 years, or at least
since January 24, 1947 (RA No. 1942).
3. Private domestic corporations or
associations which had acquired lands
from Filipino citizens who had possessed
the same in the manner and for the length
of time indicated in paragraphs 1 and 2
above
4. Natural-born citizens of the Philippines
who have lost their citizenship and who
has the legal capacity to enter into a
contract under Philippine laws may be a
transferee of private land up to a
maximum area of 5,000m2, in case of
urban land or 3 hectares in case of rural
land to be used by him for business or
other purposes (Section 5, RA No. 8179).
NOTE: When the conditions set by law are
complied with, the possessor of the land, by
operation of law, acquires a right to a grant, a
government grant, without the necessity of a
certificate of the title being issued.
The law, as presently phrased, requires
that possession of lands of the public domain
must be from June 12, 1945 or earlier, for the
same to be acquired through judicial
confirmation of imperfect title (Republic v. Doldol..
GR. No. 132963. September 10, 1998).
MEMORY AID IN CIVIL LAW
of the case to the prejudice of the
defendant
5. upon verified petition of the party who
caused the registration thereof
6. it is deemed cancelled after final judgment
in favor of defendant, or other disposition
of the action such as to terminate all rights
of the plaintiff to property involved.
Applicant Must Prove:
1. That the land is alienable and disposable
land of public domain; and
2. That they have been in open, continuous,
exclusive, and notorious possession and
occupation of the land for the length of
time and in the manner and concept
provided by law.
• Extended period for filing of
application: Section 1, RA No. 9176
provides in part that “The time to be
fixed in the entire archipelago for the
filing of applications under this chapter
shall not extend beyond 31 December
2020. Provided that the area applied
for does not exceed twelve (12)
hectares.”
FILING OF APPLICATION
Extent of Jurisdiction
GENERAL RULE: Application shall be filed
with the RTC of the province or city where
the land is situated.
EXCEPTION: Delegated jurisdiction of the
MTC to hear and determine cadastral or
land registration cases covering lots where
there is no controversy or opposition, or
contested lots, the value of which does not
exceed P100,000.00 (B.P. 129, Sec. 34, as
amended by R.A. 7691, approved March 25, 1994)
DOCTRINES:
! The regional trial courts have the authority
to act not only on original applications but
also those filed after original registration,
with power to hear and determine all
questions arising upon such applications
or petitions (Averia v. Caguioa. GR. No. L-6512.
December 29, 1986 ; Ignacio v. CA 246 SCRA 242.
July 14, 1995).
! When the issues raised before the RTC
sitting as a land registration or cadastral
court involved substantial or controversial
matters the said issue is beyond said
court’s jurisdiction. The issues may be
resolved only by a court of general
jurisdiction. Thus, petitions under Secs.
San Beda College of Law
75 and 108 of PD 1529 can be taken
cognizance of by the RTC sitting as a land
registration or cadastral court but relief
under said sections can only be granted if
there is unanimity among the parties, or
that there is no adverse claim or serious
objection on the part of any party in
interest; otherwise, the case becomes
controversial and should be threshed out
in an ordinary case or in the case where
the incident properly belongs (Tagaytay-Taal v.
CA. GR No. 106812. June 10, 1997).
Contents of Application; Annexes
1. Name of Applicant, citizenship, civil status,
name of spouse, and if marriage has been
legally dissolved, the manner of its
termination.
2. Description of the land, including the full
names and addresses of occupants and
adjoining owners, and if not known, the
extent of the search made to find them
3. Verification
4. Application covering two or more parcels
of land belonging to the applicants
provided they are situated in the same
province or city
5. ANNEXES
a. Survey plan of the land (Sec. 17 PD
1529)
b. Technical Descriptions (Sec. 15 PD 1529)
c. Certificate of the Geodetic Engineer
d. Certificate regarding the last
assessment for taxation of the
property
6. Amendments to the application including
joinder, substitution, or discontinuance of
parties may be allowed by the court at
any stage of the proceedings upon just
and reasonable terms (Sec. 19 PD 1529)
7. Additional Requirements the court
demands and not inconsistent with law
(Sec. 21 PD 1529)
8. Occupants and adjoining owners
application shall state the full names and
addresses of all occupants of the land
and those of the adjoining owners if
known and in not known, it shall state
the extent of the search made to find
them (PD 1529 Sec. 15)
a mere statement of the lack of knowledge
of the names of the occupants and
adjoining owners is not sufficient but
“what search has been made to find
them” is necessary (Francisco v. Court of
Appeals, 97 SCRA 22)
265
2008 CENTRALIZED BAR OPERATIONS
PUBLICATION, MAILING, AND POSTING
REQUIREMENTS: (PMP)
1. Publication of notice of initial hearing
Official Gazette and newspaper of general
circulation (Sec. 23, P.D. 1529)
• compliance is mandatory and
jurisdictional (Republic v. Marasigan. GR No.
85515. June 6, 1991).
Purposes:
a. To confer jurisdiction over the land
applied for upon the court
b. To c h a r g e t h e w h o l e w o r l d w i t h
knowledge of the application of the land
involved
• The pole star jurisprudential
pronouncement in this respect are
found in Grey Alba v. De La Cruz (17
PHIL 49. September 16, 1910) wherein it
was declared that a land registration
proceeding is one in rem and notice
thereof by publication binds the whole
world, inclusive of those who may be
adversely affected thereby, innocent
factually as they might have been of
such publication. Such a rule could
be the only way to give meaning to
the finality and indisputability of the
Torrens title to be issued (Francisco v.
CA, 97 SCRA 22).
NOTE: If it is later shown that the decree of
registration had included land or lands not
included in the original application as
published, then the registration proceedings
and the decree of registration must be
declared null and void – but only insofar- as
the land not included in the publication is
concerned. This is because the court did not
acquire jurisdiction over the land not included
in the publication- the publication being the
basis of the jurisdiction of the court (Benin v.
Tuason, supra).
If difference is not substantial as it would not
affect the identity of the land, republication
is not necessary.
If the amendment of the survey plan during
the registration proceedings does not
involve an addition, but on the contrary, a
reduction of the original area that was
published, no new publication is required.
(Republic v. CA, supra)
Publication alone in newspaper of general
circulation AND in the Official Gazette is
jurisdictional.
266
Land Titles & Deeds
2. Mailing of the Notice of Hearing
Administrator of Land Registration
Authority shall cause a copy of the notice of
initial hearing of the application to be mailed
to the following:
a) Every person NAMED in the notice
whose address is known
b) Secretary of DPWH, Provincial Governor,
and Mayor of the municipality or city, as
the case may be, in which the land lies, if
applicant requests to have the line of a
public way or road determined
c) Secretary of DAR, Solicitor General,
Director of Land Management, Director of
Mines and/or Director of Fisheries and
Aquatic Resources, as the case may be,
if the land borders on a river, navigable
stream or shore, or on an arm of the sea
where a river or harbor line has been
established, or on a lake, or if it otherwise
appears from the application that a
tenant-farmer or the national government
may have a claim adverse to the
applicant.
3. Posting
Posting of the copy of the Notice of
Hearing is a duty of the Sheriff which must be
made at least 14 days (2 weeks) before date
of initial hearing, in conspicuous places.
NOTE: Certification of the Administrator of LRA
and of the Sheriff concerned to the effect that the
notice of initial hearing, as required by law, has
been complied with shall be filed in the case
before the date of initial hearing, and shall be
conclusive proof of such fact (Section 24, P.D. 1529).
Service of Notice upon contiguous owners is
indispensable and lack of service constitutes
“extrinsic fraud”
ANSWER OR OPPOSITION
oppositor to an application need not be named
in the notice of initial hearing.
adverse claimants must set forth in their
answer all their objections to the application
and must claim an interest to the property
applied for, based on a right of dominion or
some other real right independent of, and
not at all subordinate, to the rights of the
government.
The opposition partakes of the nature of an
answer with a counterclaim. (Valisno v. Plan.
GR No. L-55152. August 19, 1986 )
The following may be proper oppositors:
1. a homesteader who have not yet been
issued his title but who had fulfilled all the
conditions required by law to entitle him to
a patent;
MEMORY AID IN CIVIL LAW
2. a purchaser of friar land before the
issuance of the patent to him; and
3. persons who claim to be in possession of
a tract of public land and have applied with
the Bureau of Lands for its purchase.
4. the Government relative to the right of
foreshore lessees of public land as the
latter’s rights are not based on dominion or
real right independent of the right of
government (Leyra v. Jandoc. GR No. L-16965.
February 28, 1962).
NOTE: The RULES OF COURT could be applied
in land registration proceedings in a suppletory
character or whenever practicable or convenient.
Motion to intervene in a land registration case is
not allowed. Secs. 14 and 15 of PD 1529 show
that the applicant and the oppositors are the
only parties in cases of original applications for
land registration, unlike in ordinary civil actions
where parties may include the plaintiff,
defendant, third party complainants, cross
claimants and intervenors (Dolfo v. Register of Deeds
for the Province of Cavite GR. No. 133465.September 26,
2000).
The government cannot be estopped from
questioning the validity of the certificates of
title which were granted without opposition
from the government. The principle of estoppel
does not operate against the government for
the acts of its agents (Palomo v. CA. GR. No.
95608. January 21, 1997).
EVIDENCE
The applicant must prove: (DIP)
1. that the land applied for has been declassified
and is a public agricultural land, is alienable
and disposable, or otherwise capable of
registration.
NOTE: Specific evidence
a. Presidential proclamation
b. Executive Order
c. Administrative Order issued by the
Secretary of DENR
d. Bureau of Forest Development Land
Classification Map
e. Certification by Director of Forestry
f. Investigation reports of Bureau of Lands
investigator
g. Legislative act or by statute
2. the identity of the land
NOTE: Proof of Identity of land
a. Survey plan in general
b. Tracing cloth plan and blue print copies of
plan
San Beda College of Law
in application for judicial confirmation of
titles, the submission of original
tracing cloth plan of the land approved
by the Director of Lands is a statutory
r e q u i r e m e n t o f M A N D AT O R Y
character (Director of Lands v. Reyes. 68
SCRA 177 )
statutory requirement cannot be waived
either expressly or impliedly (Director of
Lands v. Heirs of Isabel Tesalona. GR No.
66130. September 8, 1994)
c. Technical description of the land
d. Tax declarations
e. Boundaries and area
3. Possession and occupation of the land for the
length of time and in the manner required by
law
Effect of Possession
GENERAL RULE: Open, exclusive and
undisputed possession of alienable public
land for the period prescribed by law
creates the legal fiction whereby the land,
upon completion of the requisite period
ipso jure and without need of judicial or
other sanctions, ceases to be public land
and becomes private property.
The present possessor may complete the
period necessary for prescription by
tacking his possession to that of his
grantor or predecessor-in-interest (Art.
1138, Civil Code)
Tacking of possession is allowed only
when there is privity of contract or
relationship between the previous and
present possessors (South City Homes, Inc.
v. Republic. GR No. 76564. May 25, 1990).
Insufficient proofs of possession:
(COF-3T-P)
a. mere casual cultivation of portions of the
land by claimant. Reason: possession is
not exclusive and notorious so as to give
rise to a presumptive grant from the State
(Republic v. Vera. GR No. L-35778. January 27,
1983; Director of Lands v. Reyes, supra).
b. Tax declaration of land sought to be
registered which is not in the name of
applicant but in the name of deceased
parents of an oppositor. Reason:
possession of applicant is not completely
adverse or open, nor it is truly in the
concept of an owner (Sunga v. De Guzman. 90
SCRA 618 );
c. holding of property by mere tolerance of
the owner. Reason: holder is not in the
concept of owner and possessory acts no
matter how long do not start the running
of the period of prescription (Ordoñez v. CA.
GR No. 84046. July 30, 1990);
267
2008 CENTRALIZED BAR OPERATIONS
d. where applicants tacked their possession
to that of their predecessor-in-interest but
they did not present him as witness or
when no proofs of what acts of ownership
and cultivation were performed by the
predecessor (Dir. of Lands v. Datu. GR No.
L-57573. July 5, 1982).
e. mere failure of fiscal representing the
State to cross-examine the applicant on
the claimed possession (Republic v. Lee. GR
No. 64818, May 13, 1999).
f. possession of other persons in the land
applied for impugns the excusive quality
of the applicant’s possession (Dir. of Lands
v. CA and Salazar. GR No. 50340. December 26,
1984).
g. Even if the petitioners can trace their
deed of sale back to Adam and Eve , fill in
every square inch of the land with
agricultural tenants, have residential
houses built every few meters here and
there, pay the realty taxes religiously
every year and have an approved Bureau
of Lands Survey yearly, they will not
become the owners if they will not follow
the procedure to obtain public agricultural
land mandated by the Public Land Act
(CA 141) (Manalastas v. CA. GR No. 97493.
February 8, 1983).
Proof of Private Ownership (STOP)
a. Spanish title, impending cases
Spanish titles are now inadmissible and
ineffective as proof of ownership in land
registration proceedings filed after Aug.
16, 1976. All lands granted under the
Spanish mortgage law system of
registration which are not yet covered by a
certificate of title issued under the Torrens
system are deemed as unregistered land.
With the passage of Pres. Decree No. 892,
effective Feb. 16, 1976, Spanish titles can
no longer be used as evidence of land
ownership (Rep. v. CA. 135 SCRA 156).
Merely indicia of a claim of ownership (Camara
v. Malabao GR. No. 154650. July 31, 2003); that
the holder has a claim of title over the
property (Mun. of Antipolo v. Zapanta. GR No.
65334. December 26, 1984).
b. Tax declarations and tax payments
NOTES: While tax declarations and real
estate tax receipts are not conclusive
evidence of ownership, if presented as
documentary evidence coupled with proof of
actual possession for the period required by
law of the land, they are good evidences of
ownership (Heirs of Maningding v. CA. GR No.
121157. July 31, 1997). Moreover, even if
belatedly declared for taxation purposes, it
268
Land Titles & Deeds
does not negate possession especially if there
is no other claimant of the land (RP v. CA and
Divinaflor. GR No. 116372. January 18, 2001).
Where the taxes for 31 years, 1946 to 1976,
were paid only in 1976, a few months prior
to filing of the application, such payment
does not constitute sufficient proof that
applicant has bona fide claim of ownership
during those years prior to filing of the
application (Republic v. CA, 131 SCRA 140).
Mere failure of the owner of the land to pay
the realty tax thereon does not warrant a
conclusion that there was abandonment of
his right to the property (Reyes v. Sierra. GR
No. L-28658).
c. Presidential issuances and Legislative acts
NOTES: Constitutive of a “fee simple” title or
absolute title in favor of the grantee (Republic
rep. by Mindanao Medical Center v. CA GR No.
L-40912. September 30, 1976).
d. Other kinds of proof
Testimonial evidence (i.e. accretion is on
a land adjacent to a river. Any evidence that
accretion was formed through human
Hearing, Judgement, and Post Judgment, and Post
Judgment Incidents in Ordinary Land Registration
HEARING
The court may:
1. hear the parties and their evidence; or
NOTE: In the exercise of delegated
jurisdiction, the MTC can no longer appoint
commissioners
2. refer the case or any part thereof to a referee
or commissioner.
NOTE: While referee can receive evidence
and objections, it has no power to rule on
the case. Its main duty is to receive
evidence and submit its findings and
recommendations to the court.
Muniments of title: instruments or written
evidences that applicant holds or
possesses to enable him to substantiate
and prove title to his estate.
JUDGMENT
2 duties of the court:
1. Render judgment, declare the same final,
and cause the decision’s entry; and
2. Order the LRA to issue decree of
registration.
MEMORY AID IN CIVIL LAW
intervention negates the claim (Binalay v. Manalo.
GR No. 9216. March 18, 1981).
Proofs insufficient to establish private right or
ownership:
a. compromise agreement among parties to a
land registration case where they have rights
and interest over the land and allocated
portions thereof to each of them;
NOTE: assent of Dir. Of Lands and Dir. of
Forest Management to compromise
agreement did not and could not supply the
absence of evidence of title required of the
applicant (Republic v. Sayo. GR No. 61565. August 20,
1990).
b. decision in an estate proceeding of a
predecessor-in-interest of an applicant which
involves a property over which the decedent
has no transmissible right, and in other cases
where issue of ownership was not definitely
passed upon (Dir. of Lands v. IAC. 195 SCRA 38);
c. survey plan of an inalienable land.
NOTE: Such plan does not convert such land
into alienable land, much less private property
(Republic v. CA, 154 SCRA 476)
DOCTRINES / NOTES :
! Only claimed property or a portion thereof can
be adjudicated. If the applicant asserts
ownership to and submits evidence only for a
portion of a lot, the inclusion of the portion not
claimed by the applicant is void and of no
effect for a land registration court has no
jurisdiction to decree a lot to a person who put
no claim to it and who never asserted any
right of ownership over it (Almarza v. Arguelles.
GR No. L-49250. December 21, 1987).
! A land registration court has no jurisdiction to
adjudge a land to a person who has never
asserted any right of ownership thereof
(Caragay-Layno v. CA. GR No. 52064. December 26,
1984).
! The court may reverse its decision even after
the LRA has already issued the decree of
registration (Gomez v. CA. GR No. 77770. December
15, 1988).
In a land registration proceeding where
only a portion of the land subject of
registration is contested, the court may render
partial judgment provided that a subdivision
plan showing the contested and uncontested
portions approved by the Director of Lands is
previously submitted to said court (Sec. 28, PD
1529).
San Beda College of Law
! The judgment becomes final upon the lapse
of 15 days counted from receipt of notice of
the judgment. (Sec. 39, BP 129; Heirs of Cornelio
Labrada v. Monsanto. GR No. L-66242. August 31,
1984). However, notwithstanding the lapse of
the 15-day period from receipt of judgment by
the parties, the court continues to retain
control over the case until the expiration of 1
year after the entry of decree of registration
by the LRA (Republic v. Associacion Benevola de Cebu.
GR No. 77243. October 26, 1989; Sec. 32, PD 1529).
POST-JUDGMENT INCIDENTS
WRIT OF POSSESSION
GENERAL RULE: The judgment adjudicating
ownership to the successful applicant impliedly
carries with it the delivery of possession if he is
deprived, since the right of possession is
inherent in that of ownership
This is the decree issued by the LRA pursuant to
the order of the court. As such, the decree has
been considered as the ‘condensed form’ of the
court’s judgment.
! The decree of registration binds the land,
quiets title thereto, subject only to such
exceptions or liens as may be provided by
law. It is conclusive upon all persons
including the national government and all
branches thereof, whether mentioned by
name in the application or notice, the same
being included in the general description “To
All Whom It May Concern.” And such
conclusiveness does not cease to exist when
the title is transferred to a successor (Melgar v.
Pagayon. GR No. L-22731. November 15, 1967).
! The duty of the land registration officials to
issue the decree of registration is ministerial
in the sense that they act under the orders of
the court and the decree must be in
conformity with the court judgment and with
the data found in the record. However, if they
are in doubt upon any point in relation to the
preparation and issuance of the decree, they
are duty bound to refer the matter to the court.
They act in this respect, as officials of the
court. The administrator is thus not legally
obligated to issue the decree where, upon his
verification, he finds that subject land has
already been decreed and titled in another’s
name (Ramos v. Rodriguez. GR No. 94033. May 29,
1995).
By whom issued: Administrator of Land
Registration who signs the decree of
registration and attests the date and hour or its
issuance (Sec. 39 PD 1529)
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2008 CENTRALIZED BAR OPERATIONS
EXCEPTIONS:
1. A writ of possession does not lie in a land
registration case against a person who
entered the property after issuance of the
final decree and who had not been a party
in the case
2. A writ of possession cannot be issued in a
petition for reconstitution of allegedly lost
or destroyed certificate of title.
NOTE: The issuance of a writ of possession is
only a matter or course if nothing in the past has
been issued in favor of the registered owner;
there is no prescription as to its issuance (Lucero
v. Loot. GR No. L-16995. October 28, 1968).
WRIT OF DEMOLITION
a complement of the writ of possession, without
which the latter would be ineffective (Lucero v. Loot,
supra)
Decree of Registration
Finality of Decree: become incontrovertible after
one year from the date of its entry (Sec. 32 PD
1529)
When issued: The law DOES NOT limit the
period within which the court may order the
issuance of a decree of registration.
Contents (Sec. 31 P.D. 1529): (3D MO)
a. Date, hour and minute of its entry
b. It shall state whether the owner is married or
unmarried, and if married, the name of
spouse: provided that if the land is conjugal
property, the decree shall be issued in the
name of both spouses
c. If the owner is under disability the nature of
such disability, and if a minor, his age
d. Description of the land and shall set forth the
estate of the owner, and also, in such manner
as to show their relative priorities, all
particular estates, mortgages, easements,
liens, attachments, and other encumbrances
and;
e. Other matters to be determined in pursuance
of law
270
Land Titles & Deeds
This is the true copy of the decree of registration
or the transcription thereof and like the decree
shall also be signed by LRA Administrator (Sec. 39,
PD No. 1529)
• It takes effect upon the date of entry
thereof, and the land covered thereby
becomes registered land on that date
• Registration does not vest title. It is merely
evidence of such title over a particular
property. And a Torrens certificate is the
best evidence of ownership over
registered land (Villanueva v. CA. 198 SCRA
472; Chavez vs. PEA & Amari Coast Bay Dev’t.
Corp. GR No. 133250. July 9, 2002).
• H o w e v e r, s i m p l e p o s s e s s i o n o f a
certificate of title does not necessarily
make the holder thereof a true owner of all
the property described therein, such as
when title includes by mistake or
oversight, land which can no longer be
registered under the Torrens system, as
when the same land has already been
registered and an earlier certificate for the
same land is in existence (Caragay-Layno vs.
CA, supra).
• In determining whether a property belongs
to the conjugal partnership or paraphernal
property of one of the spouses, it is
important to note in whose name or names
the title is registered. This is so because
the certificate of the title does not establish
the time of the acquisition of the property.
It only confirms a pre existing title (Ponce de
Leon v. Rehabilitation Finance Corp. GR No.
L-24571. December 18, 1970).
AT T R I B U T E S A N D L I M I TAT I O N S O N
CERTIFICATES OF TITLE AND REGISTERED
LANDS:
1. Free from liens and encumbrances
Claims and liens of whatever character
existing against the land prior to the
issuance of the certificate of title are cut off
by such certificate and the certificate so
issued binds the whole world, including the
government.
EXCEPTIONS: (CNTPD)
a. Those noted on the certicate;
b. Liens claims or rights arising or
existing under the laws and the
Constitution, which are not by law
required to appear of record in the
Register of Deeds in order to be valid;
c. Unpaid real estate taxes levied and
assessed within 2 years immediately
preceding the acquisition of the right
MEMORY AID IN CIVIL LAW
Certificate of Title
over the land by an innocent
purchaser for value;
d. Any public highway, or private way
established or recognized by law, or
any government irrigation canal or
lateral thereof, if the certificate of title
does not state the boundaries of such
highway or irrigation canal or lateral
thereof have been determined
e. Any disposition of the property or
limitation on the use thereof pursuant
to P.D. 27 or any other law or
regulations on agrarian reform.
2. Incontrovertible and indefeasible
GENERAL RULE: Upon expiration of 1 year
from and after the entry of the decree of
registration in the LRA, the decree and the
corresponding certificate of title becomes
incontrovertible and indefeasible.
EXCEPTIONS: (PNF)
a. If previous valid title of the same land
exists
b. When land covered is not capable of
registration
c. When acquisition of certificate is
attended by fraud.
3. Registered land not subject to prescription
Thus, even adverse, notorious and
continuous possession under claim of
ownership for the period fixed by law is
ineffective against a Torrens title (JM Tuason
and Co. Inc. v. CA GR No. L-23480. January 31,
1962).
The fact that title to land was lost does not
mean that the land ceased to be
registered land before the reconstitution of
its title. It cannot perforce be acquired by
prescription (Rivera v. CA. GR No. 107903. May
22, 1995).
4. Certificate of title not subject to collateral
attack
Sec 48. P.D. 1529 provides that “A certificate
of title shall not be subject to collateral attack.
It cannot be altered, modified, or cancelled
except in a direct proceeding in accordance
with law.”
GENERAL INCIDENTS OF REGISTERED LAND
Registered land or the owners thereof are not
relieved from the following:
a. From any rights incident to the relation of
husband and wife, landlord and tenant
San Beda College of Law
b. From liability to attachment or levy on
execution
c. From liability to any lien of any description
established by law on the land and buildings
thereon, or in the interest of the owner in such
land or building
d. From any right or liability that may arise due
to change of the law of descent
e. From the rights of partition between co-
owners
f. From the right of government to take the land
by eminent domain
a proceeding in rem, initiated by the filing of a
petition for registration by the government, not by
the persons claiming ownership of the land
subject thereof, and the latter are, on the pain of
losing their claim thereto, in effect compelled to go
to court to make known their claim or interest
therein, and to substantiate such claim or interest
NOTE: Here, the government does not seek the
registration of land in its name. The objective of
the proceeding is the adjudication of title to the
lands or lots involved in said proceeding.
Procedure: (NN-CPP-AHDI)
1. Notice of cadastral survey published once
in OG and posted in conspicuous place;
copy furnished mayor and barangay
captain
2. Notice of date of survey by BLM and
posting in bulletin board of the municipal
building of the municipality or bario, and
shall mark the boundaries of the lands by
monuments set up in proper places
thereon
3. Cadastral survey
4. Filing of petition
5. Publication, mailing, and posting
NOTE: Publication of Notice of Initial
Hearing to be published twice in
successive issues of the Official Gazette
6. Filing of answer
7. Hearing of the case
8. Decision
9. Issuance of Decree and Certificate of Title
Jurisdiction and Powers of the Cadastral Court
in Cadastral Proceedings
a. adjudicate title to any claimant entitled
thereto
b. declare a land a public land
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2008 CENTRALIZED BAR OPERATIONS
g. From liability to be recovered by an assignee
in insolvency or trustee or bankruptcy under
the laws relative to preferences
h. From any other rights or liabilities created by
law and applicable to unregistered land
P E R S O N E N T I T L E D TO A D U P L I C AT E
CERTIFICATE OF TITLE
a. registered owner
b. each co-owner
Cadastral Registration
c. order the correction of the technical
description
d. order the issuance of new title in place of
the title issued under voluntary registration
proceedings
e. determine the priority of overlapping title
f. order the partition of the property
Actions taken by the Cadastral court of the
trial:
1. Judgment or decision which adjudicates
ownership of the land involved in favor of
one or more claimants. This is the decree
of the court.
2. Declaration by the court that the decree is
final and its order for the issuance of the
Certificate of Title by the LRA
3. Registration of the decree by the LRA and
issuance of the corresponding Certificate
of Title
DOCTRINE: The Cadastral court is not limited to
merely adjudication of ownership in favor of one or
more claimants. If there are no successful
claimants, the property is declared public land.
Additionally, while the court has no jurisdiction to
adjudicate lands already covered by a Certificate
of Title, it is nonetheless true that this rule only
applies where there exists no serious controversy
as to the certificate’s authenticity vis-à-vis the land
covered therein (Republic v. Vera. GR No. L-35778.
January 27, 1983; Widows and Orphans Assoc., Inc. v. CA.
GR No. 91797. August 29, 1991).
PD NO. 1529 AND CADASTRAL DISTINGUISHED
P.D. No. 1529 CADASTRAL
1. Nature of Registration
Voluntary Compulsory
2. Applicant
Landowner Director of Lands
272 MEMORY AID IN CIVIL LAW
Land Titles & Deeds

P.D. No. 1529 CADASTRAL 3. APPEAL

3. Lands Covered under P.D. 1529, judgments and orders in
Usually involves private all classes of lands are land registration cases are appealable to
land; it may also refer to included the Court of Appeals or to the Supreme
public agricultural lands if Court in the same manner as ordinary
the object of the action is actions
confirmation of an
imperfect title must be filed within 15 days from receipt of
the judgment or final order appealed from.
4. Parties
4. PETITION for Review (of a DECREE)
Applicant and opponent Landowners must come
to court as claimants of any person may file a petition for review to set
their own lands aside the decree of registration on the ground
5. Purpose that he was deprived of their opportunity to be
heard in the original registration case not later
Petitioner comes to court Government asks the
to confirm his title and court to settle and than one (1) year after the entry of the decree.
seeks the registration of adjudicate the title of the NOTE: It is a petition for REVIEW OF
the land in his name land JUDGEMENT when it is filed after
6. Person who Requests the Survey rendition of the decision but before the
Landowner Government entry of the decree of registration. And it
is a petition for REVIEW OF THE
7. Effect of Judgment DECREE when it is filed within the one
No adverse claim; if the if none of the applicants year period after such entry.
applicant fails to prove his can prove that he is
title, his application may entitled to the land, the Grounds for review of the decree: (FIJ)
be dismissed without same shall be declared a. actual or extrinsic fraud – refers to any
prejudice (no res judicata) public (res judicata) fraudulent act of the successful party
in a litigation which is committed
outside the trial of a case against the
Remedies of Aggrieved Party in Registration defeated party, his agents, attorneys
Proceedings (NARP RAD CACQ) or witnesses, whereby defeated party
1. NEW TRIAL is prevented from presenting full and
fairly his side.
Grounds (Section1 Rule 37,Rules of Court): (FAN)
b. fatal infirmity in the decision for want
a. Fraud, accident, mistake or excusable of due process (Tiongco v. De la Merced,
negligence which ordinary prudence G.R. No. L-24426, July 25, 1974 );
could not have guarded against
c. lack of jurisdiction of the court
b. Newly discovered evidence
Requisites for REVIEW OF THE DECREE:
c. Award of excessive damages, or
insufficiency of the evidence to justify a. petitioner has a real and dominical
the decision right
Period of filing: within the 15-day period for b. he has been deprived thereof
perfecting an appeal c. through fraud (actual/extrinsic)
2. RELIEF from Judgment d. petition is filed within one year from
Nature: subsidiary remedy, i.e. may be issuance of the decree
availed only when the judgment has e. the property has not yet passed to an
become final and a new trial is not innocent purchaser for value
available
5. Action for RECONVEYANCE
Grounds: when a judgment is entered
against a party through fraud, accident, an action seeking to transfer or reconvey the
mistake, or excusable negligence, such land from the registered owner to the
party may file a petition in the court that rightful owner
rendered such judgment praying that the may be filed even after the lapse of one year
said judgment be set aside. from entry of the decree of registration as
Period of filing: within 60 days after the long as the property has not been
petitioner learns of the judgment, order, or transferred or conveyed to an innocent
proceeding and not more than 6 months purchaser for value.
after such judgment or order was entered an action for reconveyance does not aim or
or such proceeding was taken. purport to reopen the registration
proceedings and set aside the decree of
registration but only to show that the
San Beda College of Law 273
2008 CENTRALIZED BAR OPERATIONS

person who secured the registration of the 2. any error, omission, mistake or
questioned property is not the real owner misdescription in any certificate of
thereof. The action, while respecting the title or in any entry or
decree as incontrovertible, seeks to memorandum in the registration
transfer or reconvey the land from the book
registered owner to the rightful owner
d. There was no negligence on his part
(Esconde v. Barlongay. GR No. L-67583. July 31,
1987). e. He is barred or precluded under the
provisions of PD 1529 or under the
GROUNDS F O R R E C O N V E YA N C E A N D
CORRESPONDING PERIOD OF PRESCRIPTION
provision of any law from bringing an
action for the recovery of such land or
Grounds Prescriptive Period the estate or interest therein;
1. Fraud 4 years from the discovery of f. The action has not prescribed.
the fraud (deemed to have Limitation of action (Sec. 102 PD 1529)
taken place from the
issuance of the original must be instituted within a period of 6
certificate of title) years from the time the right to bring
such action first occurred- which is the
2. Implied or 10 years from the date of the
date of issue of the certificate of title.
constructive issuance of the OCT or TCT
trust EXCEPTION: Anytime within two years
the above rule does not apply
after such disability has been removed,
where the person enforcing
notwithstanding the expiration of the
the trust is in actual
original period of six years IF the
possession of the property
person entitled to bring such right of
because he is in effect
action was a minor or insane or
seeking to quiet title to the
imprisoned, otherwise under legal
same which is imprescriptible
disability
3. Express not barred by prescription
NOTE: The right of action herein provided
trust
shall survive to the legal representative
4. Void Imprescriptible of the person sustaining loss or
Contract damage unless barred in his lifetime.
6. Action for DAMAGES 8. CANCELLATION Suits
May be resorted to when a petition for review Where two certificates are issued to different
and an action for reconveyance is no persons covering the same land, the title
longer possible because the property has earlier in date must prevail
passed to an innocent purchaser for value The latter title should be declared null and
and in good faith. void and ordered cancelled.
an ordinary action for damages prescribes in 9. ANNULMENT of judgment
ten (10) years after the issuance of the
Torrens title over the property. May only be availed of when the ordinary
remedies of new trial, petition for relief, or
7. Action for Compensation from other appropriate remedies are no longer
ASSURANCE Fund available through no fault of petitioner (Linzag v.
Requisites: Court of Appeals. GR No. 122181. June 26, 1998).
a. The aggrieved party or the suitor 10. QUIETING of Title
sustained loss or damage, or is
An action that is brought to remove clouds on
deprived of land or any estate or
the title to real property or any interest
interest therein;
therein, by reason of any instrument,
b. Such loss, damage or deprivation record, claim, encumbrance or proceeding
which is apparently valid or effective but is
1. was occasioned by the bringing
in truth and in fact invalid, ineffective,
of the land under the operation of
voidable, or unenforceable, and may be
the Torrens system, or
prejudicial to said title (Art. 476 Civil Code).
2. arose after original registration of
It is an ordinary civil remedy (Sy, Sr. v. IAC. GR
land
No. L-6674. June 16, 1988).
c. The loss, damage or deprivation was
due to: Aside from the registered owner, a person
who has an equitable right or interest in
1. fraud, or the property may likewise file such action
(Mamadsual v. Moson. GR No. 92557. September 27,
1990).
274 MEMORY AID IN CIVIL LAW
Land Titles & Deeds

11. Criminal Action such as by stating false assertions in the

sworn answer required of applicants in
State may criminally prosecute for perjury the
cadastral proceedings (People v. Cainglet. GR Nos.
party who obtains registration through fraud,
L-21493-94. April 29, 1966).

Land Patents
Public lands suitable for agricultural purposes NOTE: when a free patent title is issued to an
are disposed as follows: applicant and the sea water moves toward the
estate of the title holder, the invaded property
1. homestead settlement
becomes part of the foreshore land. The land
2. sale under the Torrens system reverts to the public
3. lease domain and the title is annulled (Republic v. CA and
Josefina Morato. GR No. 100709. November 14, 1997).
4. confirmation of imperfect title or incomplete
titles either by judicial or administrative after a free patent application is granted an the
legalization corresponding certificate of title is issued, the land
ceased to be part of the public domain and
5. free title (Com. Act No. 691 as amended by RA 63) become private property over which the Director
of Lands had neither control nor jurisdiction (Sumail
To Whom
Requirements v. Judge of CFI of Cotabato. April 30, 1955).
Granted
1. to any - does not own more than
Home- Filipino 24 hectares of land in the Restriction on Alienation/Encumbrance of
stead citizen over Phils. or has not had the Lands titled Pursuant to Patents:
Patent the age of benefit of any gratuitous
18 years or allotment of more than 24 1. Lands acquired under free patent or
head of a hectares homestead patent is prohibited, except if
family - must have resided in favor of the government, 5 years from
continuously for at least 1 and after the issuance of the patent or
year in the municipality grant (RP v. Heirs of Felipe Alejaga, Sr., GR No.
where the land is situated
- must have cultivated at 146030. December 3, 2002).
least 1/5 of the land 2. Transfer or conveyance of any homestead
applied for after 5 years and before 25 years after
2. Free to any - does not own more than issuance of title without the approval of
Patent natural born 12 hectares of land the Secretary of DENR
citizen of the - has continuously
Phils. occupied and cultivated, Actions against improper, illegal issuance of
either by himself or his patents
predecessors-in- interest 1. Reversion suits
tract/s of agricultural public
land subject to disposition The objective is the cancellation of the
3. Sales citizens of - to have at least 1/5 of the certificate of title and the consequential
Patent the Phils. of land broken and cultivated reversion of the land covered thereby
lawful age or within 5 years from the to the State.
such date of the award
Grounds for reversion:
citizens not - shall have established
of lawful age actual occupancy, a. Violation of Sections 118, 120, 121
who is head cultivation and and 122 of the Public Land Act (eg.
of a family improvement of at least Alienation or sale of homestead
may 1/5 of the land until the executed within the 5 year
purchase date of such final payment
prohibitory period)
public
agricultural b. When land patented and titled is
land of not not capable of registration
more than
12 hectares c. Failure of the grantee to comply
with conditions imposed by law to
4. to Non- Secretary of the DILG shall entitle him to a patent or grant
Special Christian certify that the majority of
d. When area is an expanded area
Patents Filipinos the non-Christian
(Republic v. Heir of Villa Abrille. GR No.
under Sec. inhabitants of any given
84 of the reservation have advanced L-39248. May 7, 1976).
Public Land sufficiently in civilization e. When the land is acquired in
Act. violation of the Constitution (eg.
San Beda College of Law
Land acquired by an alien may be
reverted to the State).
NOTE: indefeasibility of title, prescription,
laches and estoppel do not bar reversion
suits
Reconstitution of Certificate of Title
The restoration of the instrument which is
supposed to have been lost or destroyed in its
original form and condition, under the custody of
Register of Deeds.
Purpose: to have the same reproduced, after
proper proceedings, in the same form they
were when the loss or destruction occurred
(Heirs of Pedro Pinote v. Dulay. GR No. 56694. July 2,
1990).
Kinds:
1) Judicial - partakes the nature of a land
registration proceeding in rem.
2) Administrative - may be availed of only in
case of:
a. Substantial loss or destruction of the
original land titles due to fire, flood, or
other force majeure as determined by
the Administrator of the Land
Registration Authority;
b. The number of certificates of title lost
or damaged should be at least 10% of
the total number in the possession of
the Office of the Register of Deeds;
c. in no case shall the number of
certificates of title lost or damaged be
less than P500; and
d. Petitioner must have the duplicate
copy of the certificate of title (RA 6732).
NOTE: The law provides for retroactive
application thereof to cases 15 years
immediately preceding 1989.
When the duplicate title of the landowner is
lost, the proper petition is not reconstitution
of title, but one filed with the court for
issuance of new title in lieu of the lost copy.
Sources for Judicial Reconstitution of Title:
1. For OCT (in the following order):
a. Owner’s duplicate of the certificate of
title
b. Co-owner’s, mortgagee’s or lessee’s
duplicate of said certificate
c. Certified copy of such certificate,
previously issued by the Register of
Deeds
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2008 CENTRALIZED BAR OPERATIONS
2. Cancellation Suits
it is the aggrieved private party that
institutes the action (Agne v. Dir. of Lands. GR
No. 40399. February 6, 1990).
3. Action for Reconveyance
d. Authenticated copy of the decree of
registration or patent, as the case may
be, which was the basis of the
certificate of title
e. Deed or mortgage, lease or
encumbrance containing description
of property covered by the certificate
of title and on file with the Registry of
Deeds, or an authenticated copy
thereof
f. Any other document which, in the
judgment of the court, is sufficient and
proper basis for reconstitution.
2. For TCT
a. Same as sources a), b), and c) for
reconstitution of OCT
b. Deed of transfer or other document
containing description of property
covered by transfer certificate of title
and on file with the Registry of Deeds,
or an authenticated copy thereof
c. same as sources e) and f) for
reconstitution of OCT.
Sources for Administrative Reconstitution of
Title
1. owner’s duplicate of the certificate of title
2. co-owner’s, mortgagee’s, or lessee’s
duplicate of said certificate
Publication, Mailing and Posting in petitions
for reconstitution of title
Rules:
a. Notice thereof shall be published twice in
successive issues of the Official Gazette
b. Must be posted on the main entrance of
the provincial building and of the municipal
building of the municipality or city where
the land is situated
c. to be sent by registered to every person
named in said notice
NOTE: The above requirements are
mandatory and jurisdictional (Metropolitan
Waterworks and Sewerage System v. Sison. GR No.
L-40309. August 31, 1983).
276
Land Titles & Deeds
Other Petitions/Transactions After Original Registration
A M E N D M E N T A N D A LT E R AT I O N O F
CERTIFICATE OF TITLE
Grounds:
a. When registered interests of any
description, whether vested, contingent, or
inchoate have terminated and ceased
b. When new interests have arisen or been
created which do not appear upon the
certificate
c. When any error, omission, or mistake was
made in entering a certificate or any
memorandum thereon or on any duplicate
certificate
d. When the name of any person on the
certificate has been changed
e. When the registered owner has been
married, or, registered as married, the
marriage has terminated and no right or
interest of heirs or creditors will thereby be
affected
f. When a corporation, which owned
registered land and has been dissolved,
has not conveyed the same within 3 years
after its dissolution
g. When there is a reasonable ground for the
amendment or alteration of title.
NOTE: The court has no jurisdiction or authority to
reopen the judgment or decree of registration; nor
impair the title or other interest of a purchaser
holding a certificate for value and in good faith, or
his heirs and assigns, without his or their written
consent. After due hearing, the court may only:
a. Order the entry or cancellation of a new
certificate
b. Order the entry or cancellation of a
memorandum upon a certificate, or
c. Grant any other relief upon such terms and
conditions as it may consider proper (Secs. 107
and 108, PD 1529)
! END OF LAND TITLES AND DEEDS
MEMORY AID IN CIVIL LAW
SURRENDER OF WITHHELD DUPLICATE
CERTIFICATE OF TITLE
Grounds:
a. When it is necessary to issue a new certificate
of title pursuant to any involuntary instrument
which divests the title of the registered owner
against his consent
b. Where a voluntary instrument cannot be
registered by reason of the refusal or failure of
the holder to surrender the owner’s duplicate
certificate of title; and
c. Where the owner’s duplicate certificate is not
presented for amendment or alteration
pursuant to a court order
R E P L A C E M E N T O F L O S T D U P L I C AT E
CERTIFICATE OF TITLE
“due notice under oath shall be sent by the
owner or by someone in his behalf to the
Register of Deeds of the province of city
where the land lies as soon as the loss or
theft is discovered” (Section 109, PD 1529).
Petition for replacement should be filed with
the RTC of the province or city where the
land lies.
Notice to Solicitor General by petitioner is not
imposed by law but it is the Register of
Deeds who should request for
representation by the Solicitor General
(Republic v. CA. 317 SCRA 504).
A proceeding where the certificate of title was
not in fact lost or destroyed is null and void
for lack of jurisdiction and the newly issued
duplicate is also null and void (New Durawood
Co., Inc. v. CA. GR No. 111732. February 20, 1996).
Grounds for amendment or correction of title
(Sec. 108, PD 1529)
a. that an error or omission was made
therein;
b. that a registered interest is terminated;
c. that new rights have arisen which do not
appear on the certificate;
d. that the name or status of the person
mentioned in the certificate has been
changed;
e. when the corporation has been dissolved;
f. any other reasonable ground.
"
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CIVIL LAW
CONFLICT OF LAWS
CONFLICT OF LAWS
Private International Law or Conflict of Laws Essential Components of Conflict Rules:
That part of the Municipal Law of a State which 1. Supposition of Fact (tatbestand);
directs its courts and Administrative agencies,
2. Point of Connection or Point of Contact;
when confronted with a legal problem involving
a foreign element, whether or not they should 3. Juridical Consequence
apply a foreign law or foreign laws. Functions:
• It is NOT part of International Law. 1. To prescribe the conditions under which a
Elements: court or agency is competent to entertain a
suit or proceeding involving facts with a
1. There is a legal problem involving a
foreign element;
foreign element;
2. To specify the circumstances in which
A factual situation that cuts across
foreign judgment will be recognized as
territorial lines and is affected by diverse
valid and binding in the forum; and
laws of two or more States is said to
contain a foreign element. 3. To determine for each class of cases the
particular system of law by reference to
2. The primary function is to determine
which the rights of the parties must be
whether the rules of law or the judgments
ascertained.
of some other State/s will govern and if so,
to what extent should these be recognized
or applied in the forum. PUBLIC AND PRIVATE INTERNATIONAL LAW
Areas of Private International Law DISTINGUISHED
i. Choice of Law PRIVATE
PUBLIC International Law
International Law
ii. Jurisdiction
As to nature or character
iii. Recognition and Enforcement of Foreign
Judgments International in character National, municipal
or local in character
Nature of Conflicts Rules:
As to persons involved
It is a part of the national law of every state; Governs states and entities Governs private
Philippine rules of Conflict of laws are wholly internationally recognized or individuals or
distinct from those of California, Japan, et al. possessed of international corporations
personality, exceptionally,
individuals, too.

EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations,
AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics,
RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance,
JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics

CIVIL LAW
KATHERI ANN CHARCOS subject chair
KAMILLE JOYCE CARRANZA assistant chair
RYAN DARYL PINEDA edp
SEAN BUENSUCESO persons and family relations, MA. REBECCA EVANGELISTA property, MELAMY ASPERIN
wills and succession, DICT UNTAYAO obligations and contracts, MEL JOHN VERZOSA sales and lease,
KATHERINE JANE MANARANG partnership, agency and trust, EDGAR MICHAEL ROBLES credit transactions, J.
RICARDO MOREÑO torts and damages, HERBERT CALVIN ABUGAN land titles and deeds, KATHERI ANN
CHARCOS conflicts of laws

MEMBERS: Analyn Banzuela, Cherry Joyce Basbaño, Jayson Belandres, Kring Carayugan, Kathrina Contacto,
Janice Domogan, Annie Donato, Donna Dumpit, Mary Joy Emetario, Carrisa Ann Enano, Joseph Fabul, Catherine
Flores, Karla Funtila, Lea Galura, Jayson Gambon, Hansen Gan, Ace Gando, Jervis Gaspar,Victoria Gonzales
-Diego, Katheryn Joy Hautea, Nina Ifurung, Jackie Lou Lamug, Paula Laureano, John Henry Liquete, Charizma Madriaga,
Jadelee Marquez, Gisela Cecilia Mauhay, Libby Morales, Eva Naparan, Deo Natividad, Gilbert Ocampo, Farrah Pacia,
Aldrin Palacio, Pearl Principio, Mary Grace Pulido, Kristian Ramos, Derick Rebolledo, Sharon Saclolo, Camhella Sandoval,
Manolo Santos, Kathleene Sision, Pauline Sistoza, Dioxenos Sulit, Josh Villena, Arthur Zapanta
278 MEMORY AID IN CIVIL LAW
Conflict of Laws

PUBLIC International Law
As to transactions involved
Recognizes transactions in
which sovereign States are
interested
As to remedies applied
In case of violation of
International Law, the State
may resort to diplomatic
protest, negotiation,
arbitration or adjudication by
filing cases before
international tribunals or may
even resort to use of force or
go to war
PRIVATE SOURCES:
International Law
DIRECT SOURCES
Bilateral and multilateral treaties and international
Assumes control conventions; codifications and statutes; judicial
over transactions decisions; and international customs
which are strictly
private in nature INDIRECT SOURCES
The natural moral law, and the writings and
All remedies are treatises of thinkers and famous writers and
provided by jurists, among others.
municipal laws of the
State, such as resort
to courts and
administrative
tribunals

In International law, it is often defined as the right
of a State to exercise authority over persons and
things within its boundaries, subject to certain
exceptions.
1. Judicial Jurisdiction
Legal authority of a state to exercise authority,
through its courts or agencies, to hear and
adjudicate cases.
2. Legislative Jurisdiction
The power of a state to regulate or control,
through rules of law, interest of persons in a
thing, event or situation.
TYPES OF JUDICIAL JURISDICTION
A.
JURISDICTION OVER THE PERSON
Competence of a court to render a decision that
will bind the parties to a case.
1. Jurisdiction over the person of the plaintiff is
acquired from the moment he invokes the aid
of the court and voluntarily submits himself by
institution of the suit through proper
pleadings.
2. Jurisdiction over the person of the defendant
is acquired through:
a. voluntary appearance or
b. through coercive process thru personal or
substituted service of summons (Sec. 6 and
7 Rule 14 of the Revised Rules of Court)
c. service upon foreign private juridical
entities (Rule 14, Sec. 12)
Jurisdiction
B.
JURISDICTION OVER THE RES
Jurisdiction over the particular subject matter in
controversy, regardless of the persons who may
be interested therein.
• Results either from the seizure of property
under a legal process or from the
institution of legal proceedings wherein the
court’s power over the property is
recognized and made effective.
• This kind of jurisdiction is referred to as in
rem jurisdiction in contrast to in personam
jurisdiction
• Another form of jurisdiction is quasi in rem
which affects only the interests of
particular persons in the thing.
NOTE: Summons by publication is authorized in
three cases:
1. If the action is in rem, or
2. quasi in rem, or
3. involves the personal status of the plaintiff
4. Rule 14, Secs. 15-16
Where the suit is in personam, jurisdiction over
the defendant must be acquired by voluntary
appearance or by personal/substituted service of
summons. However, service by publication may
be allowed in accordance with Sec 14, Rule 14 of
Revised Rules of Court (defendant whose identity
or whereabouts are unknown). Note however, the
view that the personal action must be converted to
in rem.
LONG-ARM STATUTES
A law that allows a plaintiff to make a claim
against a defendant who is a non-domiciliary of a
state, provided that there are minimum contacts
with the forum to justify jurisdiction over him.
San Beda College of Law
C.
JURISDICTION OVER THE SUBJECT MATTER
Conferred by law;
The power to hear and determine cases of the
general class to which the proceedings in
question belong.
• The test of jurisdiction is whether or not
the law vests upon the tribunal the power
to enter upon the inquiry.
Basic principle underlying all rules of
jurisdiction:
A State does not have jurisdiction in the
absence of some reasonable basis for
exercising it, whether the proceedings are in
rem, quasi in rem, or in personam. To be
reasonable, the jurisdiction must be based on
some minimum contacts that will not offend
traditional notions of fair play and substantial
justice.
MINIMUM CONTACTS TEST AND FUNDAMENTAL
FAIRNESS TEST
Due process requires only that in order to subject
a defendant to a judgment in personam, if he is
not present within the territory of the forum he
should have certain minimum contacts with it
such that the maintenance of the suit does not
offend traditional notions of fair play and
substantial justice.
In both in rem and quasi-in rem, all that due
process requires is that defendant be given
adequate notice and opportunity to be heard
THEORIES THAT JUSTIFY THE APPLICATION
OF FOREIGN LAW IN CONFLICTS CASES:
1. Theory of Comity
No foreign law would be allowed to operate in
another state EXCEPT by the reciprocal
courtesy which members of the family of
nations owe to one another.
2. Vested Rights Theory
Rights acquired in one country must be
recognized and legally protected in other
countries. The forum will not apply the foreign
law but will simply recognize the right vested
by said law.
3. Local Law Theory
The forum will craft a rule similar to the
foreign law, if the foreign law has become part
and parcel of our own local law.
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2008 CENTRALIZED BAR OPERATIONS
which are met by service of summons by
publication.
Ways of Disposing of Conflicts Cases:
A. D e t e r m i n e w h e t h e r t h e c o u r t h a s
jurisdiction over the case. If none, dimiss
the case, either because of lack of
jurisdiction over the subject matter or over
the parties to the suit or refusal to assume
jurisdiction pursuant to the doctrine of
forum non conveniens.
PRINCIPLE OF FORUM NON CONVENIENS
A court may resist imposition upon its
jurisdiction even when jurisdiction is
authorized by law. The reason given for
refusal to assume jurisdiction is that there
is some other available forum, having
jurisdiction, which is the appropriate forum
for trial of the action.
B. Assume jurisdiction over the case and
apply the forum’s internal law, that is the
law applied by the court to purely domestic
cases;
Instances Justifying the Application of Internal
Law to Conflicts Cases:
1. Where application of internal law is
decreed;
2. Where there is failure to plead and prove
foreign law;
3. Where a case involves any of the
exceptions to the application of foreign
law.
Choice of Law
4. Cavers' Principle of Preference (Theory of
Justice)
Choice of law should be determined by
considerations of justice and social
expediency and should not be the result of
mechanical application of the rule or principle
of selection.
5. Harmony of Laws Theory
Identical or similar problems should be given
identical or similar solutions, thus resulting in
harmony of laws.
EXCEPTIONS TO APPLICATION OF FOREIGN
LAW
1. Where enforcement of foreign law is
contrary to an important public policy
of the forum (Examples: Protection of the
working class, policy against divorce, etc).
280
Conflict of Laws
2 Kinds of Public Policy as to Extent of
Operations:
a. one which operates no matter where
the event or transaction takes place
b. one which operates only where the
event or transaction takes place in the
forum and is not offended if the
transaction is completed abroad.
Public Policy may be used by courts in
different ways:
a. it may refuse to entertain the case
because enforcement of the action is
against its public policy and dismiss it
without prejudice.
b. it may entertain the case but apply its
own domestic law to decide the
controversy in favor of the plaintiff.
c. it may entertain the case but invoke its
own public policy in order to apply the
forum’s domestic law.
2. Where application of foreign law would be
against good morality in the wider sense
of the term as understood in the forum.
(contra bonos mores)
3. Foreign penal law –Crimes committed in
foreign countries cannot be prosecuted in the
Philippines (territoriality in Criminal Law).
However, enforcement of foreign penal law
must be distinguished from their
recognition, a state may recognize foreign
penal laws for various purposes, though it
will not directly enforce such laws in its
jurisdiction.
A “penal clause” in a contract entered into
abroad may, however, be enforced here
because such is NOT criminal in nature
but only provides for liquidated damages.
Based on the assumption that in the
enforcement of the rules of public order of
a State, other States are not concerned
and should not, as a general rule interfere.
4. Foreign procedural law- all procedural
aspects of a given case are to be determined
by the internal law of the forum, regardless of
where the transaction occurred out of which
the claim in question arose.
Reason: If foreign procedural laws were to be
applied, it would involve a making over of the
machinery for the administration of justice in
the forum.
5. Questions relating to property in the
forum.
Reason: Art. 16 of the Civil Code mandates
the application of Lex Situs or Lex Rei Sitae to
ALL properties, whether real or personal,
found and located here.
MEMORY AID IN CIVIL LAW
6. Foreign fiscal or administrative law, i.e. tax
law, local rates and the like
Reason: A sovereign has no legal duty to
assist foreign governments in the financing of
their activities.
7. Where application of foreign law would
involve injustice or injury to the residents
of the forum.
8. Where application of foreign law would
endanger the foreign relations or vital
interests of the state.
PROOF OF FOREIGN LAW
GENERAL RULE: No Judicial Notice of Foreign
Law. Thus, if alleged to apply, it must be
PROVED according to the following rules:
a. Written law
i. By official publication
ii. Copy attested by officer having legal
custody thereof. If the record is not
kept in the Philippines, a certificate
with seal from secretary of embassy,
legation, consul general, consul, vice
consul, consular agent or any officer
in the foreign service of the
Philippines stationed in the foreign
country to the effect that said officer
has custody is required (Sec. 24 Rule 132
of the Revised Rules of Court).
iii. A published treatise on the subject law
provided that the court takes judicial
notice of the competence of the writer,
or evidence is introduced to establish
the author’s competence (Rule 130, Sec.
46).
b. Unwritten law – by oral testimony of expert
witnesses.
The testimony of an expert witness
may be allowed to prove a foreign law. The
court has ruled in other cases that Sec.
25, Rule 132 of the Rules of Court does
not exclude the presentation of other
competent evidence to prove the
existence of a foreign law (Asiavest Limited v.
Court of Appeals. GR NO. 128803. September 25,
1998).
Effect of failure to plead or prove foreign law
1. Technically, if the plaintiff’s cause of action
rests on foreign law and it is not proved,
there is no cause of action. This may be a
proper ground for Demurrer to Evidence. If
the defense rests on foreign law that is not
proved then the defense fails (Aquino,
Elements of Private International Law, 2nd ed., page
101).
San Beda College of Law
2. The case will not be dismissed, rather, the
doctrine of processual presumption will
become operative.
NOTE: this proceeds from the theory that
the basic law is the law of the forum and
when the claimed applicable foreign law is
not proved, then the court has no reason
to displace the basic law.
Characterization of Conflicts Rules
CHARACTERIZATION or DOCTRINE OF
QUALIFICATION
Process of deciding whether or not the facts
relate to the kind of question specified in a
conflicts rule (Saudi Arabian Airlines v. CA, GR NO.
122191, October 8, 1998)
Three stages in Characterization:
1. The problem of classification
2. The characterization of the “point of
contact” or the “connecting factor”
3. The extent of the application of the law
that is chosen as applicable to the conflicts
case
The court should apply the selected proper
law to the factual situation for the
purpose of deciding what, if any, legal
consequences result from the situation
or, if a thing is in question, what
interests are created in the thing.
The law chosen should be applied only
insofar as it brings about the good it
was intended to bring.
MOST COMMON PROBLEM OF
CHARACTERIZATION:
WHETHER OR NOT A PARTICULAR RULE OF LAW IS
PROCEDURAL OR SUBSTANTIVE.
If issue is substantive, apply foreign law, but if
procedural, forum law.
I. Questions of Evidence
- clearly procedural and the law of the forum
must control.
II. Statute of Frauds
a. Substantive - if the words of the law relate
to forbidding the obligation.
b. Procedural - if the law forbids the
enforcement of the obligation.
III. Statute of Limitations and Borrowing
Statutes
1. Statute of limitations
a. Substantive - when the limitation was
directed to the newly created liability
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2008 CENTRALIZED BAR OPERATIONS
! A Philippine court may take judicial notice,
as when the laws are already within its
actual knowledge, such as when they are
well and generally known or they have
been actually ruled upon in other cases
before it and none of the parties
concerned claim otherwise (PCIB v. Escolin.
GR Nos. L-27860 & 27896 September 30,1975).
specifically to warrant a qualification
of the right (specificity test).
b. Procedural - if it operates to bar only
the legal remedy without impairing
the substantive right involved.
5. Borrowing statute
directs the state of the forum to apply the
foreign statute of limitations to the
pending claims based on a foreign law
• the characterization of a statute of
limitation into procedural or
substantive becomes irrelevant when
the country of the forum has a
borrowing statute. It has the practical
effect of treating the foreign statute of
limitation as one of substance.
NOTE: A law on prescription is sui generis in
Conflict of Laws in the sense that it may be
viewed either as procedural or substantive,
depending on the characterization given such a
law (Cadalin v. POEA. GR No. 104776. December 5, 1994).
DEPECAGE
The phenomenon where the different aspects of
the case involving a foreign element may be
governed by different systems of law.
• Allows the other relevant interests of the
parties to be addressed; permits the courts to
arrive at a functionally sound result without
rejecting the methodology of the traditional
approach
PROPOSED SOLUTIONS TO THE PROBLEM
OF CHARACTERIZATION:
1. The Lex Fori Solution
The forum characterizes according to its own
law, and then applies the law (domestic or
foreign) consequent upon its classification.
2. The Lex Causae Solution
Characterization will depend on the
governing law.
282
Conflict of Laws
3. The Analytic Jurisprudence and
Comparative Law Solution
Calls upon the court to determine the
common patrimony of juridical concepts;
The law which governs persons, family relations,
legal condition, capacity, civil status, and the
consequences of one’s actuations
NOTE: Personal law governs a person wherever
he goes. The personal law of an individual is
either his national law or the law of his place of
domicile.
THEORIES IN DETERMINING THE
PERSONAL LAW OF AN INDIVIDUAL
A.
NATIONALITY THEORY (PERSONAL THEORY)
Nationality
refers to the membership in a political community,
one that is personal and more or less permanent,
not temporary.
• In conflict of laws, the word “nationality” &
“citizenship” are used interchangeably.
• The Philippines adheres to the nationality
theory (Art. 15, New Civil Code).
• It is for each State to determine who are its
nationals (Hague Convention); but it must be
consistent with international treaties,
international customs, and principles of law
generally recognized with regard to
nationality.
Problems in Applying the Nationality Principle
DUAL OR MULTIPLE CITIZENSHIP
This arises from the concurrent application of jus
soli and jus sanguinis at birth or from a refusal of
certain States to accept a full application of the
doctrine of expatriation or from marriage or from a
formal and voluntary act
a. In matters of status, he is usually considered
by the forum as exclusively its own national,
his additional foreign nationality is
disregarded
b. In case the litigation arises in a third country,
the law most consistently applied is that of
the country of which the person is not only
a national but where he also has his
domicile or habitual residence, or in the
absence thereof, his residence.
THEORY OF EFFECTIVE NATIONALITY
A third state shall, of the nationalities which
any such person possesses, recognize
exclusively in its territory either the nationality
MEMORY AID IN CIVIL LAW
Employs characterization of a universal or
quasi-universal character.
4. The Double Characterization Solution
Couples the lex fori and lex causae
solutions
Personal Law
of the country of which he is habitually and
principally resident, or the nationality of the
country with which in the circumstances he
appears to be in fact most closely connected
(Art. 5 Hague Convention on Conflict of Nationality
Laws).
STATELESSNESS
Stateless persons are generally subject to the law
of their domicile or habitual residence, and in
default thereof, to the law of their temporary
residence (Hague Conference of 1928 on International
Private Law).
A person may become stateless by the following
means:
a. Deprivation of his citizenship for any
cause, such as commission of a crime;
b. Renunciation of one’s nationality by
certain acts, express or implied;
c. Voluntary release from his original
state;and
d. If born in a country which recognizes only
the principle of jus sanguinis of parents
whose law recognizes only the principle of
jus soli.
NOTE: Convention on the Reduction of
Statelessness adopted in 1961 mandates that the
jus sanguini country grant its nationality to a
person born within its territory if he would
otherwise be stateless, and the jus soli country to
extend its nationality to a person who would
otherwise be considered stateless when one of his
parents is a citizen of the contracting state.
B.
DOMICILIARY THEORY (TERRITORIAL
THEORY)
The individual’s private rights, condition, status,
and capacity are determined by the law of his
domicile or lex domicilii.
NOTE: The forum determines domicile
according to its own standards.
Domicile is the place of which a person has a
settled connection for certain legal purposes,
either because his home is there or because
that is the place assigned to him by law.
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2008 CENTRALIZED BAR OPERATIONS

Domicile Residence Citizenship 3. Domicile of Choice (voluntary domicile)

Fixed, permanent Place of Indicates ties place freely chosen by a person sui juris as
residence to which, abode, of allegiance his home and to which, whenever he is
when absent, one whether and loyalty absent, he intends to return
has the intention of permanent to acquire domicile of choice, there must be a
returning or temporary concurrence of physical presence in the
new place and unqualified intention to
make that place one’s home.
Legal Classification of Domicile
1. Domicile of origin
General Rules on Domicile (Gallego v. Verra, GR No.
MINOR L-48641, November 24, 1941):
Person’s domicile at birth 1. No person shall be without domicile
Legitimate child’s domicile of origin is that of 2. A person cannot have two simultaneous
his father and an illegitimate child’s is that domiciles.
of his mother.
3. Every natural person, as long as he is free
In case of a foundling, domicile is in the and sui juris, may change his domicile at
country where he is found. pleasure.
In case of an adopted child, his domicile is 4. Domicile once acquired is retained unless a
that of the adopter’s which becomes his new one is gained.
constructive domicile
5. The presumption is in favor of the
MARRIED WOMEN continuance of domicile. The burden of proof
The right to decide the question of where the is on the one who alleges that a change of
family domicile should be established is now a domicile has taken place.
joint prerogative of husband and wife (Family 6. To acquire a domicile a fresh domicile,
Code). residence and intention must concur; to retain
an existing domicile, either residence there or
2. Constructive Domicile (Domicile by
intention to remain must be present; to
Operation of Law)
abandon a domicile, residence in a new place
a domicile assigned by law to persons legally and intention to abandon the old place must
incapable of choosing their own domicile (e.g. concur.
minors, mentally disabled)
C.
Domicile of origin Constructive domicile SITUS OR ECLECTIC THEORY
acquired at birth Assigned after birth The capacity, condition, or status of a person is
Assigned only to Assigned to persons governed by the law of the place (situs) where an
infants under legal disabilities important element of the problem occurs or is
situated.
Never changes May change from time to
time

A procedure whereby a legal matter presented is
referred by the conflict of laws rules of the forum
to a foreign state, the conflict of laws rule of which,
in turn refers the matter back to the law of the
forum (remission) or a third state (transmission).
• It is a French word which means a “referring
back”
4 Ways of Treating the Renvoi Problem
1. Rejection (Internal Law Solution)
If the conflicts rules of the forum refer the
case to the law of another state, it is deemed
to mean only the internal law of that state.
Thus, the court will apply the foreign law.
Renvoi
2. Acceptance (Single Renvoi/Single
Transmission)
If the conflicts rules of the forum refer the
case to the law of another state, it is deemed
to include the totality of the foreign law
(internal law and conflicts of laws rules). Thus,
the court will recognize the referral back and
apply local law.
3. Desistment Theory (Mutual Disclaimer of
Jurisdiction Theory)
4. The forum court upon reference to another
state’s law sees that such law is limited in
application to its own nationals domiciled in its
territory and has no provision for application
284 MEMORY AID IN CIVIL LAW
Conflict of Laws

to nationals domiciled outside of the territory. DOUBLE RENVOI

Hence, the local court will apply local law.
It is that which occurs when the local court, in
T h i s h a s th e s a m e r e s u l t a s th e adopting the foreign court theory, discovers that
acceptance of the renvoi doctrine but the the foreign court accepts the renvoi.
process used by the forum court is to desist
TRANSMISSION
applying the foreign law
It is the process of applying the law of a foreign
5. Foreign Court Theory
state through the law of a second foreign state.
Forum court assumes the same position that
the foreign court would take if the case is
litigated in the foreign state.

Personal Status and Capacity

SYNOPSIS OF THE RULES ON STATUS Personal status - legal position of an individual in
society.
POINT OF
FACTUAL SITUATION Capacity - power to acquire and exercise rights.
CONTACT
1. Beginning of personality National law of the
of natural persons Child (Art. 15, NCC) • In the determination of status and capacity of
2. Age of Majority National law (Art. 15) persons, our Civil Code follows the nationality
principle when dealing with Filipinos.
3. Use of Names and National law (Art. 15)
Surnames
• When dealing with aliens, it depends on which
principle their country follows but if the alien is
4. Use of Titles of Nobility National law (Art. 15) in the Philippines, the nationality theory is
5. Absence National law (Art. 15) applied by implication
6. Presumptions of Death Lex Fori
and Survivorship

Choice of Law Problems

Choice of Law Problems
Under the New Civil Code, questions of family
rights, duties, status, conditions and capacity are
governed by lex nationalii.
MARRIAGE
MARRIAGE AS A CONTRACT
EXTRINSIC VALIDITY - governed by lex loci
celebrationis.
GENERAL RULE:
a. All states recognize as valid those
marriages celebrated in foreign countries if
they comply with the formalities prescribed
therein (Hague Convention).
b. The forms and solemnities of contracts,
wills and other public instruments, shall be
governed by the laws of the country in
Family Relations
which they were executed (Art. 17 Civil
Code).
c. All marriages solemnized outside the
Philippines, in accordance with the laws in
force in the country where they were
solemnized, and valid there as such, shall
also be valid in this country (Art. 26 Family
Code).
EXCEPTIONS: The following are void marriages
in the Philippines even if valid in the foreign
country where celebrated:
a. When either or both parties are below 18
years of age even with parental consent;
b. Bigamous and polygamous marriages;
c. Mistake as to identity of a contracting
party;
San Beda College of Law
d. A subsequent marriage performed without
recording in the Civil Registry the
judgment of annulment or declaration of
nullity, partition and distribution of
properties and the delivery of the
children’s presumptive legitimes;
e. Marriages where either spouse is
psychologically incapacitated;
f. Incestuous marriages; and
g. Void marriages by reason of public policy.
NOTE: These exceptions put into issue the
capacity of the parties to enter into the
marriage and therefore relate to the
substantive requirement for marriage. Since
the personal law of the parties, e.g. the
national law of Filipinos, governs the questions
of intrinsic validity of marriages between the
Filipinos abroad, the above enumerations are
exceptions to lex loci celebrationis precisely
because they are controlled by lex nationalii
Rules on Extrinsic Validity of Certain
situations:
1. Proxy marriages
GENERAL RULE: where permitted by the
law of the place where the proxy
participates in the marriage ceremony,
are entitled to recognition in countries
adhering to lex loci celebrationis rule, at
least insofar as formal validity is
concerned.
NOTE: Internal Philippine law does not
sanction proxy marriages, it is doubtful
whether this will be recognized here.
2. Common law marriages
If valid in the State where the parties
cohabited while holding themselves out as
man and wife, it is given recognition in sister
States which do not permit this informal
method of entering into the marital status
NOTE: common law marriages are not
recognized under the Philippine internal law
3. Marriage on board a vessel on High seas
Since the nation whose flag the ship is flying
has jurisdiction over the ship, the rule is that
compliance with this law is required for a
marriage to be validly contracted
4. Consular marriages
Marriages between Filipino citizens abroad
may be solemnized by a consul-general,
consul or vice-consul of the Philippines
(Art. 10, Family Code)
Marriage performed by a consular and
diplomatic agent empowered by the
sending state to officiate marriage is valid
in the receiving state only if the latter has
agreed to his acting in that capacity.
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2008 CENTRALIZED BAR OPERATIONS
INTRINSIC VALIDITY - controlled by the parties’
personal laws (either domiciliary or nationality).
2. MARRIAGE AS A STATUS
PERSONAL RIGHTS AND OBLIGATIONS
BETWEEN THE SPOUSES
governed by the national law of the parties
NOTE: if the spouses have different nationalities,
generally the national law of the husband may
prevail as long as said law is not contrary to law,
customs and good morals of the forum.
Justice Sempio-Diy is of the opinion that it will be
the national law of the wife, or Philippine law,
that would govern the spouses’ personal
relations by parity of reasoning with Art. 80 of
the Family Code (Handbook of Conflicts of Laws, page
79).
The marriage of an alien woman to a Filipino
husband does not ipso facto make her a
Filipino citizen and does not excuse her from
her failure to depart from the country upon the
expiration of her extended stay here as an
alien (Djumanton v. Domingo, 240 SCRA 746 (1995).
PROPERTY RELATIONS BETWEEN THE
SPOUSES
The Hague Convention declares that the
governing law on matrimonial property regime is:
1. The internal law designated by the
spouses before the marriage
2. In the absence thereof, the internal law of
the state in which the spouses fix their 1st
habitual residence
Philippine Rule on property relations:
In the absence of a contrary stipulation in the
marriage settlements, the property relations of
the spouses shall be governed by Philippine
laws, regardless of the place of the celebration
of the marriage and their residence.
This rule shall not apply:
1. Where both spouses are aliens;
2. With respect to the extrinsic validity of
contracts affecting property not situated in
the Philippines and executed in the
country where the property is located;
and
3. With respect to the extrinsic validity of
contracts entered into in the Philippines
but affecting property situated in a foreign
country whose laws require different
formalities for their extrinsic validity (Art.
80 Family Code).
286 MEMORY AID IN CIVIL LAW
Conflict of Laws

DOCTRINE OF IMMUTABILITY OF MATRIMONIAL the law of the wife are all available grounds for
PROPERTY REGIME granting legal separation.
Regardless of the change of nationality by either
or both of the spouses, the original property
regime that prevailed at the start of their marriage ANNULMENT AND
prevails. DECLARATION OF NULLITY
Annulment – remedy if the marriage is voidable;
Grounds are those provided for by the law
DIVORCE (A VINCULO alleged to have been violated
MATRIMONII) Declaration of Nullity - remedy is the marriage is
Hague Convention provides that the granting of void ab initio; Grounds are the exceptions to
divorce or separation must comply with the the Lex Loci Celebrationis in Art 26 of the
national law of the spouses and the law of the Family Code
place where the application for divorce is made.
JURISDICTION TO ANNUL
vested in the court of the domicile of the
SYNOPSIS OF THE RULES ON DIVORCE parties. Jurisdiction over the non-resident
defendant is not essential. It is the status of
FACTUAL POINT OF CONTACT the plaintiff that is in issue. He should be
SITUATION domiciled in the forum.
1. If sought in the Lex Fori (will not be THE GOVERNING LAW
Philippines (whether granted)
by Filipinos or Exception: Muslim lex loci celebrationis determines the
foreigners) Divorces consequences of any defect to form.
2. If obtained National Law (thus, NOT Generally, the same applies with reference to
abroad BETWEEN VALID here even if valid substantive or intrinsic validity. But with
FILIPINOS abroad) regard to capacity of the parties to marry,
their national law is determinative.
3. If obtained National Law (if valid in the
abroad BETWEEN state granting it, and valid
FOREIGNERS according to the national
law of the parties, it will be
STATUS OF CHILDREN
valid here) LEGITIMACY AND ILLEGITIMACY
4. If obtained Apply (2) and (3) Determination of Legitimacy of a Child
abroad between a respectively. See, however,
FILIPINO AND A Art. 26, par. 2 of the Family Legitimacy of the child is governed by the
FOREIGNER Code common personal law of the parents (either
domiciliary or nationality).
Philippine rule:
RELATIVE DIVORCE OR LEGAL • The legitimacy of the child is governed by
SEPARATION (A MENSA ET the national law of the parents.
THORO) • If parents belong to different nationalities,
GENERAL RULE: We only observe relative legitimacy of the child is governed by the
divorce (legal separation) in the Philippines. national law of the father.

EXCEPTION: Where a marriage between a

Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly
obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino
spouse shall have capacity to remarry under
Philippine law (Art. 26, Family Code).
CONFLICTS RULES ON LEGAL SEPARATION
If the parties are of the same nationality, the
grounds for legal separation are those given by
their personal law.
If the parties are of different nationalities, the
grounds available under the personal law of
the husband as well as those available under
• Personal law of the illegitimate child is the
mother’s personal law.
NOTE: However, in the case of Tecson v.
COMELEC, Ronald Allan Kelly Poe and Fornier
(GR No. 161434. March 3, 2004), the Supreme Court
held that providing neither conditions nor
distinctions, the 1935 Constitutions states that
among the citizens of the Philippines are those
whose fathers are citizens of the Philippines.
The 1935 Constitution confers citizenship to
all persons whose fathers are Filipino citizens
regardless of whether the children are legitimate
or illegitimate.
San Beda College of Law
DOCTRINE OF IMMUTABILITY OF STATUS
The status of the child (whether legitimate or
illegitimate) is not affected by a subsequent
change of nationality of the parents.
If the child is later legitimated, personal law of the
child follows that of the father.
Parental Authority over the Child
Personal law of the father controls the rights and
duties of parents and children
NOTE: Reference to the personal law of the father
may result in joint exercise of parental authority
over the property of the child by father and mother
(e.g. Article 221, Family Code).
Father’s personal law could grant parental
authority to the mother of the illegitimate children
(e.g. Article 176, Family Code)
2. LEGITIMATION
The requisites of legitimation are those prescribed
by the national law of the parents.
If the parents have different national laws, the
national law of the father is determinative.
• Our internal law on legitimation of children
is found in Arts. 177-182 of the Family
Code.
3. ADOPTION
The determinative law as to whether the
relationship of adoption has been created or not:
1. The child’s personal law, to protect his
well-being;
2. If the child does not reside in the country
of his citizenship, the personal law of the
adopter will govern, or the personal law of
the adopter and that of the child will be
applied concurrently.
Under the Domestic Adoption Act of 1998, an
alien may adopt provided that he is:
1. of legal age,
2. in possession of full civil capacity and
legal rights,
3. of good moral character,
4. no conviction of any crime involving
moral turpitude,
5. emotionally and psychologically
capable of caring for children,
6. at least sixteen years older than the
adoptee,
7. in a position to support and care for his
children,
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8. his country has diplomatic relations with
the Philippines,
9. residence in the Philippines for at least
three continuous years prior to the filing
of the application for adoption and
maintains such residence until the
adoption decree is entered,
10. certificate of legal capacity to adopt in
his country to be issued by his diplomatic
or consular office, and
11. his government allows the adoptee to
enter his country as his adopted son/
daughter
The requirement on residency and certificate of
qualification to adopt may be waived for the
following:
a. a former Filipino citizen who seeks to
adopt a relative within the fourth (4th)
degree of consanguinity or affinity; or
b. one who seeks to adopt the legitimate son/
daughter of his/her Filipino spouse; or
c. one who is married to a Filipino citizen and
seeks to adopt jointly with his/her spouse
a relative within the fourth (4th) degree of
consanguinity or affinity of the Filipino
spouse.
The requirement of sixteen years difference
between the adopter and the adoptee may be
waived if the adopter is:
a. the biological parent of the adoptee
b. the spouse of the adoptee’s parent
INTER-COUNTRY ADOPTION
A socio-legal process of adopting a Filipino child
by a foreigner or a Filipino citizen permanently
residing abroad where the petition is filed, the
supervised trial custody is undertaken, and the
decree of adoption is issued outside the
Philippines.
This is an alternative means of child-care if the
child cannot be cared for in any suitable
manner in the Philippines.
NOTE: Adoption is not one of the ways prescribed
by law for the acquisition of Filipino citizenship.
288 MEMORY AID IN CIVIL LAW
Conflict of Laws

Property
CONTROLLING LAW EXCEPTIONS:
Real property as well as personal property is 1. Art. 16, par. 2 of NCC
subject to the law of the country where it is
2. The issue is the rights and liabilities of the
situated (Art. 16 of the NCC).
parties as a matter of contract even if the
Rationale for lex situs or lex rei sitae rule: the subject matter is land
property being physically part of the country 3. The validity and effect of the obligation
should be subject to the laws thereof. which the encumbrance on an immovable
secures
SYNOPSIS OF CONFLICT RULES ON PROPERTY 4. Under a policy centered approach, when
the situs of the movable at the time of the
FACTUAL SITUATION POINT OF CONTACT transfer was insignificant or accidental.
1. REAL PROPERTY Lex Rei Sitae 5. When the issue involves consideration
Exceptions: a. National law of the other than the validity and effect of the
a. Successional rights decedent
transfer – the court may look into the law
b. Capacity to succeed b. Lex Loci Voluntatis or
c. Contracts involving real Lex Loci Intentionis of another state which has a real interest
property but which do c. The principal contract in applying its law.
not deal with the title is governed by the 6. The validity of the contract to transfer an
thereto proper law of the immovable
d. Contracts where real contract. The
property is given as mortgage, however, is
security governed by Lex Rei
Sitae. SPECIAL TYPES OF MOVABLE PROPERTY
2. TANGIBLE a. Lex rei Sitae 1. Choses in possession (tangible physical
PERSONAL PROPERTY Exceptions: same as objects)
(Choses in Possession) that for real property GENERAL RULE: governed by the law of the
a. In general except that in the
Exceptions: same as security is called a place where the property is located at the
those for real property pledge, not a time of transaction determines the creation
b. Means of transportation mortgage and the transfer of interests (lex situs)
i. vessels b. Means of EXCEPTION: those which do not have affixed
ii. other means Transportaion situs (usually in motion or those having
c. Thing in Transitu i. law of the flag or
i. loss, destruction, ii. law of the place of changing situs), are given ARTIFICIALLY
ii. deterioration iii.registry CONSTRUCTIVE SITUS
iii.validity and effect of iv.law of the depot Rules governing different kinds of
the seizure of goods c. Thing in transition transfers:
iv.disposition or i. law of the
alienation of goods destination a. voluntary transfers of interests in chattels
ii. locus regit actum (other than assignment for the benefit of
(where seized) creditors) – validity and effect of
iii.lex loci voluntatis or conveyance as between the parties are
lex loci intentionis determined by the local law of the State
3. INTANGIBLE a. where debtor may be which, with respect to the particular issue,
PERSONAL PROPERTY effectively served with has the most significant relationship to
(Choses in Action) summons the parties.
a. Recovery of debts or b. lex loci voluntatis or
involuntary assignment lex loci intentionis b. acquisitions of title by operation of law
of debts (e.g. acquisition by prescription or
b. voluntary assignment of adverse possession, validity and priority
debts of attachments, levies of execution,
statutory liens) – governed by lex situs
2. Choses in action (intangible movables)
CAPACITY TO TRANSFER OR ACQUIRE
PROPERTY CREDITS OR DEBTS
governed by lex situs. i. Voluntary transfer or assignment of
choses in action - there are 3 theories as
to the law which may govern:
EXTRINSIC AND INTRINSIC VALIDITY OF (a) Personal law of the parties
CONVEYANCES
(b) L a w o f t h e p l a c e w h e r e t h e
GENERAL RULE: Governed by lex situs. assignment was executed
San Beda College of Law
(c) Law of the place where the debt is
recoverable
ii. Involuntary transfer of choses in action
(e.g. garnishment) - governed by the law
of the state where the debtor may be
served with summons, which is usually at
his domicile.
iii. Situs of a debt for taxation purposes - the
domicile of the creditor, where the
collectible credit may be taxed.
iv. Administration of debts – the situs is the
place where the assets of the debtor are
usually situated.
NEGOTIABLE INSTRUMENT – governed by the
law of the place indicated in the instrument
or place of delivery.
C ORPORATE SHARES – as against the
corporation and third persons, the transfer
or assignment are governed by the law of
the place of incorporation. As between the
assignor and assignees, the transfer will
be governed by the law most closely
connected to the transaction
GOODWILL - governed by the law of principal
place of business.
FRANCHISES - subject to the law of the state
that granted them.
P AT E N T S ,
COPYRIGHTS, TRADEMARKS,
TRADENAMES, AND SERVICEMARKS – the
general rule is that these are protected
only by the state that granted or
recognized them. The exception if when a
treaty provides otherwise.
EXTRINSIC VALIDITY – governed by lex loci
celebrationis (Art. 17 of the NCC).
Variations:
1. A contract entered into by the parties in two
different countries by cablegram, telex or fax
the contract is presumed to have been
entered in the place where the offer was
made (Art. 1319, par. 2, NCC)
2. If the place of execution was merely casual or
accidental
the law which has the most significant
relationship to the transaction should be
applied
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I N T E R P R E TAT I O N A N D E F F E C T O F
CONVEYANCE
law of situs governs
Rules governing goods in transitu:
a. Seizure and arrest – Where the owner’s
creditor’s seize the goods in transit, the
result is that the transport is discontinued
and a temporary resting place is thereby
created. On the law of this place will
depend on whether the seizure was lawful
or whether he has acquired a lien, pledge,
privilege, or a similar right or what pertains
to that right.
b. Disposition of goods – questions arising
from transactions involving movables in
transit may be resolved by law of any
place having substantial connection with
the transaction which will uphold its
validity. The owner is thus permitted to
choose between several legal systems:
1. Law of the temporary resting place
(e.g. interim port)
2. Lex loci actus
3. Law of the place of destination
4. Law of the last real situs of goods
Rules governing Means of Transport:
a. in case of sea going vessels – the law of
the flag ; or
b. as in states consisting of several countries
(e.g. United Kingdom) – the place of
registry.
Contracts
INTRINSIC VALIDITY – there is no specific
provision in the NCC. However, the policy of
our law is to give effect to the intention of the
parties (Art. 1306 Civil Code). There are 3
possible laws that may govern:
a. law of the place where the contract is
made or lex loci contractus
b. law of the place of performance or lex loci
solutionis
c. law intended by the parties or lex loci
intentionis
PHILIPPINE RULE:
The contracting parties may establish such
stipulations, clauses, terms, conditions as they
may deem convenient provided that they are not
contrary to law, morals, good customs, public
order, or public policy (Art. 1306, Civil Code)
290
Conflict of Laws
NOTE: Hence, when the parties stipulate that
the contract be governed by the specific law,
such will be recognized (lex loci intentionis)
subject to the limitation that it is not against
the law, morals and public policy of the forum
and it must bear a substantive relationship to
the transaction.
In the absence of an effective choice of law,
express or implied, the contract will be
governed, with respect to the particular
issue involved, by the law which has the
closest and most substantial connection
with the transaction and the parties
Capacity to enter into contracts –
determined by the personal laws of the
contracting parties (either nationality or
domiciliary) (Art. 15 of the NCC).
CHOICE OF LAW ISSUES IN CONFLICTS
CONTRACT CASES
Generally, the parties cannot select a law that has
NO connection at all with the transaction.
1. Choice of Forum Clause
parties may stipulate on the venue of the suit
in case of litigation concerning the
contract. However, a case arising from a
contract will be litigated in the forum
chosen by the parties if the choice of
forum clause specifically identifies it as the
only venue.
when there is no fraud or overreaching, and
there is no showing that the choice of
forum clause would be unreasonable and
unjust, the clause must be given effect.
2. Contracts with Arbitration Clause
In the Philippines, the provisions of the Civil
Code on arbitration and the arbitration law
RA 876 embodies a clear legislative policy
in favor of settling controversies by a
method considered more expeditious, less
expensive and with greater chance in
some cases for substantial justice.
Many courts apply to arbitration agreements
the law of whatever place the parties have
designated as governing, thus sustaining
their agreement to arbitrate.
3. Adhesion Contracts
Adhesion contracts are not entirely prohibited.
The one who agrees to the contract is in
reality free to reject it entirely; if he
adheres, he gives his consent.
When there is no proof of arbitrariness, abuse
of power, or gross negligence, the contract
or stipulation will be enforced. Such
contract is valid if it is reasonable and just
under the circumstances, and has been
fairly and freely agreed upon.
MEMORY AID IN CIVIL LAW
When there is an oppressive use of superior
bargaining power, a Philippine court may
be justified in refusing to apply the contract
or a stipulation thereof on the ground that
there is no real arm’s-length transaction
between the contracting parties.
4. Special Contracts
a. Sale, Donation or Barter of goods –
governed by lex situs.
Lease of Property
• If it creates real rights – lex situs
• If it does NOT create real rights – law
on contracts
b. Contract of Loan
• If mutuum - rules on contracts
• If Commodatum – lex situs
c. Lease of service, agency, guaranty, or
suretyship – the law on contracts will
apply
• But an agency to alienate or encumber
real property is governed by Lex Situs.
Pledge, Chattel mortgage, Real Estate
Mortgage, antichresis – lex situs.
Transportation by Sea:
i. Philippine ports to Foreign ports –
law of the country of destination
ii. Foreign ports to Philippine ports
• Civil Code – primary law
• Code of Commerce
• Carriage of Goods by Sea Act
d. International Air Transportation –
governed by the Warsaw Convention
NOTES: Convention applies to all international
carriage of person, baggage or goods performed
by aircraft for hire. It does not apply to carriage of
mail and postal packages.
Liability of carrier for loss destruction and
deterioration of goods transported to the
Philippines from a foreign country is governed
primarily by the Civil Code and not by Warsaw
Convention.
The limit of liability for baggage lost is $1,000
and for death of passenger is at $100,000
(Alitalia vs. IAC and Pablo 192SCRA9).
Period of responsibility includes the time during
which baggage or goods are in the charge of
the carrier, whether in an airport or in any
place, whatsoever.
It does not operate as an exclusive enumeration
of instances when a carrier shall be liable for
breach of contract or as an absolute limit of the
extent of liability nor does it regulate or exclude
liability for other breaches of contract by the
San Beda College of Law
carrier, misconduct of its employees, or for
some particular or exceptional type of damage.
Limits of liability shall not apply if it is proved
that the damage resulted from an act or
omission of the carrier his servants or agents
done with intent to cause damage or recklessly
and with knowledge that damage would
probably result, provided that it is proved that
the servant or agent is acting within the scope
of the employment.
Suits may be prosecuted in any of the following
places at the option of the plaintiff-passenger:
1. court of the domicile of the carrier
2. court of the principal place of business of
the carrier
3. court where the carrier has a place of
business through which the contract was
made
4. court of the place of destination
The action will prescribe if it is not brought within
two years from the:
1. date of arrival at the destination
2. date on which the aircraft ought to have
arrived
3. date on which the transportation stopped
NOTE: the method of counting the period
of limitation is determined by the law of the
forum (lex fori)
With respect to transportation by successive
carriers:
each of the carrier who accepts the
passengers or baggage shall be subject to the
Wills and Administration of Estates
TWO THEORIES IN DETERMINING THE
PROPER LAW FOR THE TRANSMISSION OF
SUCCESSIONAL RIGHTS:
1. UNITARY OR SINGLE SYSTEM
only one law determines transmission of real
and personal properties
2. SPLIT OR SCISSION SYSTEM
Philippine Law follows the UNITARY SYSTEM
(Art. 16 of the NCC).
Gen. Rule in Phil. Conflicts Law (Art. 17, par.2 of
the NCC):
1. Law governing the Extrinsic validity of
wills:
a. testator is a Filipino
i. will is executed in the Philippines –
Philippine law
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rules set out in the convention and shall be
deemed as one of the contracting parties
insofar as the contract deals with that part of
the transportation which is performed under his
supervision.
• The passenger or representative can take
action only against the carrier who
performed the transportation during which
the accident or delay occurred, unless by
express agreement the first carrier has
assumed the responsibility for the entire
journey.
• As regards baggage or goods, the
passenger or consignor shall have a right
of action against the first carrier, and the
passenger or consignee shall have the
right of action against the last carrier.
Furthermore, each may take an action
against the carrier who performed the
transportation during which the loss,
damage or delay took place. These
carriers shall be jointly and severally liable
to the passenger, or to the consignor or
consignee.
In cases where the convention does not
apply, the Second Restatement holds that the
validity of the contract of carriage as well as
the rights created thereby are determined, in
the absence of an effective choice of law by
the parties, by the local law of the state from
which the passenger departs or the goods are
dispatched, unless with respect to the
particular issue, some other State has a more
significant relationship to the contract and to
the parties.
ii. will is executed in a foreign country
• Lex loci celebrationis;
• Philippine law
b. testator is an Alien
i. will is executed in the Philippines
• Philippine law; or
• National law of the testator
ii. will is executed in a foreign country
• National law of the testator; or
• Law of Domicile; or
• Lex loci celebrationis; or
• Philippine law
NOTE: Joint wills executed by Filipinos
whether in the Philippines or abroad, even
though authorized by the foreign country in
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Conflict of Laws
which they may have been executed, shall not
be valid in the Philippines (Art. 819 Civil Code).
The validity of a will as to its form depends
upon the observance of the law in force at
the time it is made.
2. Law governing the intrinsic validity of
wills:
Governed by the national law of the person
whose will is under consideration in force at
the time of his death (Art. 16, par. 2, NCC).
3. Interpretation of wills – governed by the
decedent’s national law.
4. Revocation of wills
If the revocation takes place in the
Philippines, whether the testator is
domiciled in the Philippines or in some
other country, it is valid when it is in
accordance with the laws of the
Philippines.
If the revocation takes place outside the
Philippines, by a testator who is domiciled
in the Philippines, it is valid when it is in
accordance with the laws of the
Philippines.
Revocation done outside the Philippines, by a
testator who does not have his domicile in
this country, is valid when it is done
according to the:
a. law of the place where the will was
made, or
Lex loci delicti comissi or law of the place where
the alleged tort was committed will govern.
Concepts of Place of Wrong (locus delicti)
1. Place of injury (common law concept) –
looks to the place where the last event
necessary to make an actor liable for an
alleged tort occurs.
• 1.
in line with the vested rights theory
2. Place of conduct (civil law rule) – view the
situs of torts as the place where the tortuous
act was committed.
3. Theory of Dr. Rabel – the locus delicti is the
place which has the most substantial
connection with the wrongful act.
OBLIGATION THEORY
The tortuous act gives rise to an obligation, which
is transitory and follows the person committing the
tortuous act and may be enforced wherever he
may be found.
MEMORY AID IN CIVIL LAW
b. law of the place in which the testator
had his domicile at the time of
revocation;
5. Probate of wills – being procedural in
character, the law of the forum governs
procedural matters.
6. Administration of Estates – Philippine law
and procedure follow the main principle of
territorialism. The axiom is that the law of the
domicile governs distribution but the law of
the State appointing the administrator or
executor governs administration.
Administration is governed by the law where
administration takes place, and that is the law
of the country from which the administrator
derives his authority.
NOTE: The Administration extends only to the
assets of the decedent found within the state
or country where it was granted. To administer
the property situated in a foreign state, the
administrator must be re-appointed, or a new
one named in that state.
7. Distribution of Estates – regulated
according to the national law of the person
whose succession is under consideration
(Art. 16, par. 2 of the NCC).
CADUCIARY RIGHTS
the State is the last heir of a deceased
person. Hence, the State succeeds to the
properties left by the said deceased as an
heir.
Torts
MODERN THEORIES IN DETERMINING
LIABILITY FOR TORTS
1. Theory of Most Significant Relationship
An action for tort may be filed in the country
where it has the most significant relationship.
In determining the state which has the most
significant relationship, the following factors
are to be taken into account:
Place where the injury occurred;
2. Place of conduct causing the injury;
3. Domicile, residence, nationality, place
of incorporation and place of business
of the parties; and
4. Place where relationship between the
parties is centered.
Give controlling effect to the law of the
jurisdiction which, because of its relationship
or contact with the occurrence or the parties,
has the greatest concern with the specific
issue of the case.
San Beda College of Law
2. The Interest-Analysis Approach
The approach considers the relevant
concerns that two or more states may have in
the case. The State which has the more
relevant and weighty interests in the case
should be considered the locus delicti.
3. Qaver’s Principle of Preference
A higher standard of conduct and financial
protection given to the injured party by one
State is applied by the State where the injury
happened, if the latter State adopts a lower
standard of conduct and financial protection to
the injured.
Conditions for the Enforcement of Tort Claims
1. The foreign tort is based on a civil action
and not on a crime;
Penal laws and those of public security shall be
obligatory upon all who live or sojourn in
Philippine territory subject to the principles of
Public International Law and to treaty stipulations
(Art. 14 of the NCC).
GENERAL RULE: Lex loci delicti or the law of the
place where the crime was committed will
govern.
EXCEPTIONS:
1. Crimes committed by state officials,
diplomatic representatives and officials of
recognized international organizations.
NOTE: This is based on the theory of state
immunity from suits
2. Crimes committed on board a foreign
vessel even if within the territorial waters
of the coastal state, as long as the effect
of such crime does not affect the peace
and order of the coastal state
3. Crimes which, although committed by
Philippine nationals abroad are punishable
under the local law pursuant to the
protective principle of criminal jurisdiction
(i.e. Article 2 of the Philippine Revised Penal Code)
THEORIES AS TO WHAT COURT HAS
JURISDICTION TO TRY CRIMINAL
CASES (THEORIES ON EXTRA-
TERRITORIAL COMPETENCE)
1. TERRITORIAL THEORY
The State where the crime was committed
has jurisdiction to try the case.
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2. The enforcement of the tort would not
infringe the public policy of the forum; and
3. The judicial machinery of the forum is
adequate for its proper enforcement.
Philippine rule on foreign torts:
• There is no governing specific statutory
law but courts may give due course on the
theory of vested rights or most significant
relationship provided that there are
minimum contacts and the defendant can
be served with summons.
• In case of injuries which involve physical
harm, mental disturbance, false
imprisonment, malicious prosecution – the
law of the State where the injury was
inflicted.
• In case of intentional torts – the law of the
State where the actor initiated or carried
out the tortuous act.
Crimes
2. NATIONALITY OR PERSONAL THEORY
(ACTIVE NATIONALITY THEORY)
The country of which the criminal is a citizen
or a subject has jurisdiction to try him for the
offense he is supposed to have committed,
whether the effectuation of the act be inside or
outside its territory, PROVIDED that the act is
a crime under his country’s penal law.
3. PROTECTIVE THEORY
Any State whose national interests may be
jeopardized has jurisdiction over criminal
offenses, even if committed outside its
territory, and even if committed by an alien in
order that it may protect itself.
4. REAL THEORY (ECLECTIC THEORY)
Any State whose penal code has been
transgressed upon has jurisdiction to bring
justice to the perpetrators of the offense,
whether the crime was committed inside or
outside its own territory.
5. C O S M O P O L I TA N O R U N I V E R S I T Y
THEORY
Any State where the criminal is found or
which has custody over him is vested with
jurisdiction to try him for the crime he is
alleged to have committed – unless
extradition is possible.
6. PA S S I V E P E R S O N A L I T Y T H E O R Y
(PASSIVE NATIONALITY THEORY)
The state of which the victim is a citizen or
subject has jurisdiction.
NOTE: The Philippines follows as a general rule
the TERRITORIAL THEORY; by way of exception,
we also occasionally and in the proper cases
make use of the PROTECTIVE TEHORY.
294
Conflict of Laws
CORPORATION/PARTNERSHIP
THEORIES ON THE PERSONAL OR
GOVERNING LAW OF A CORPORATION
a. The personal law is the law of the place
of incorporation;
b. The personal law is the law of the place
or center of management (central office
principle); and
c. The personal law is the place of
exploitation
Rule followed in the Philippines
GENERAL RULE: Place of incorporation rule
EXCEPTIONS:
a. Constitutional and Statutory
Restrictions (Art. XII)
b. Control test during war – courts may
pierce the veil of corporate identity and
look into the nationality of stockholders
to determine citizenship of the
corporation
The Law of the Place of Incorporation is
applicable to the following issues:
1. existence and the legal character of the
corporation
2. capacity and powers of the corporation
3. internal organization of the corporate
enterprise
4. alteration of the charter and the dissolution
of the corporation
Domicile or residence of foreign corporations
When not fixed by the law creating them, it
shall be understood to be the place where their
legal representation is or where they exercise
their principal functions.
NOTE: A foreign corporation granted license to
operate in the Philippines acquires domicile
here.
Jurisdiction over Foreign Corporations
because of the consent of the state a foreign
corporation will be recognized and will be
allowed to transact business in any state which
gives it consent. This consent doctrine is
established in section 125, 126, 127, and 128
of the Corporation Code of the Philippines
NOTE: all foreign corporations lawfully doing
business here in the Philippines shall be bound
by all laws rules and regulations applicable to
domestic corporations except provisions for
the creation, formation, organization or
dissolution of corporations or those which fix
the relations the relations, liabilities,
responsibilities or duties of stockholders,
MEMORY AID IN CIVIL LAW
Business Associations
members or officers of the corporation to each
other.
service of summons upon foreign corporations
doing business in the Philippines may be
made on:
1. Its resident agent;
2. In the absence thereof, process will be
served on the government official
designated by law or any of its officers
or agent within the Philippines;
3. On any officer or agent of said
corporation in the Philippines; and
4. serving summons through diplomatic
channels.
Right of a Foreign Corporation to bring suit
GENERAL RULE: No foreign Corporation
transacting business in the Philippines
without a license, or its successors or
assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding
in any court or administrative agency of the
Philippines but such corporation may be
sued or proceeded against before
Philippine courts or administrative tribunals
on any valid cause of action recognized
under the Philippine laws (Sec. 133 Corporation
Code). Hence, acquisition by a foreign
Corporation of a license to transact
business in the Philippines is an essential
prerequisite for the filing of suits before
courts.
EXCEPTIONS:
1. Isolated transactions;
2. Action to protect trademark, trade
name, goodwill, patent or for unfair
competition;
3. Agreements fully transacted outside
the Philippines; and
4. Petition filed is merely a corollary
defense in a suit against it.
Effect of Failure to Secure a license to
Transact Business
The foreign corporation which does business
in the Philippines without a license has no
right to sue in the Philippines, but can still be
sued. Although the contracts entered into may
be valid as between the parties, it may not be
enforced in the Philippine courts.
TRUSTS
When the trust contains an express choice of law
provision, that law shall be applied.
San Beda College of Law 295
2008 CENTRALIZED BAR OPERATIONS

In the absence of express provision, the courts will 7. Judgment must be for a fixed sum of
deem controlling the law that will sustain the money;
validity of the trust.
8. Foreign judgment must not be contrary to
the public policy or good morals of the
country where it is to be enforced;
RECOGNITION AND ENFORCEMENT OF
FOREIGN JUDGMENTS 9. Judgment must not have been obtained by
fraud, collusion, mistake of fact or law; and
FOREIGN JUDGMENT
10. It must be a judgment on civil or
Decisions rendered outside the forum and
commercial matters, including questions of
encompasses judgments, decrees and orders
status.
of courts of foreign countries.
Philippine rule:
The effect of a judgment or final order of a
Recognition of Foreign Enforcement of tribunal of a foreign country, having
Judgment Foreign Judgment jurisdiction to render the judgment or final
The defendant or The plaintiff or order is as follows:
respondent is presenting petitioner wants the a. In case of a judgment or final order
the foreign judgment merely court to positively upon a specific thing, the judgment or
as a defense, on the basis carry out and make final order is conclusive upon the title
of res judicata. effective the foreign to the thing; and
judgment.
b. In case of a judgment or final order
Invokes merely a sense of Implies an act of against a person, the judgment or final
justice (Perkins v. Benguet sovereignty order is presumptive evidence of a
Consolidated Mining, L-1981-82, right as between the parties and their
May 28, 1954) successors in interest by a subsequent
Needs no proceeding or Requires a title.
action but implies that the separate action In either case, the judgment or final order may
same has already been filed brought precisely to be repelled by evidence of a want of
against the defendant who make the foreign jurisdiction, want of notice to the party,
is invoking the foreign judgment effective. collusion, fraud, or clear mistake of law or fact
judgment (Rule 39, Sec. 48 of the 1997 Rules of Civil Procedure).

NOTES: Enforcement necessarily implies

recognition; recognition does not necessarily imply
enforcement.
Examples of foreign judgments which can only
be recognized: declaratory judgments, judgments
which give no affirmative relief, judgments which
determine the parties’ interests in a thing or status.

Requisites for Recognition or Enforcement:

1. It must be a judgment in a judicial or
quasi-judicial action issued by a impartial
court of competent jurisdiction;
2. The defendant has been given reasonable
notice and opportunity to be heard;
3. The foreign judgment must have disposed
of the controversy on the merits;
4. It must not be barred by prescription both
in the State where it was promulgated and
where it is sought to be enforced;
5. Judgment must be final and executory to
constitute res judicata in another action;
6. State where the foreign judgment was
obtained allows recognition or
enforcement of Philippine judgments;
 San Beda College of Law
2008 CENTRALIZED BAR OPERATIONS

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Sempio Diy, Alicia. Handbook on Family Code of the Philippines 15th ed., 2002
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De Leon, H., Comments and Cases on Partnership, Agency and Trust, 2002, Quezon City, Philippines: Rex
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De Leon, H., Comments and Cases on Credit Transactions, 2002, Quezon City, Philippines: Rex Printing
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Salonga, Jovito. Private International Law, 1995 edition. Metro Manila, Philippines: Rex Book Store

That In All Things God May Be Glorified!